ROLLUP: Binance Commingling User Funds | Ledger Recover Postponed

Bankless Weekly Rollup 4th Week of May 2023 ------ 🚀 AIRDROP ALPHA 🚀 https://bankless.cc/Alpha ------ 🚀 Consensys Diligence Fuzzing https://bankless.cc/diligence-fuzzing-pod ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 🦊METAMASK LEARN | HELPFUL WEB3 RESOURCE https://bankless.cc/MetaMask 👾STADER LABS | ETHX LIQUID STAKING https://bankless.cc/Stader ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/Toku 🎮IMMUTABLE | GAMING ECOSYSTEM https://bankless.cc/Immutable 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ------ Topics Covered 0:00 Intro 3:45 MARKETS 6:25 ETH Staking https://dune.com/hildobby/eth2-staking 8:40 Lido Withdrawals https://twitter.com/TrueWaveBreak/status/1660860593526431744 10:55 Germany Recession https://www.reuters.com/markets/europe/germany-enters-recession-2023-05-25/ 12:10 Buying vs Renting https://twitter.com/GRDecter/status/1661057543219675136 15:00 1 in 10 Americans Use Crypto https://twitter.com/SebVentures/status/1661063483369177108 Brian Armstrong - https://twitter.com/brian_armstrong/status/1661449616393666560 20:00 NVDA AI https://www.cnbc.com/2023/05/24/nvidia-nvda-earnings-report-q1-2024.html 25:30 Postponing Ledger Recover https://www.ledger.com/blog/ledger-recover-a-message-from-pascal-gauthier-chairman-ceo-at-ledger 28:45 DCG Missed Payment https://twitter.com/ramahluwalia/status/1660981239254269952 33:20 Tornado Cash Hack https://twitter.com/samczsun/status/1660012956632104960 37:40 Binance Commingling Funds https://www.reuters.com/investigates/special-report/crypto-binance-money/ https://twitter.com/BanklessHQ/status/1661411951627436038 46:30 Apple Pay STEPN - https://twitter.com/Stepnofficial/status/1660616595792601091 Axie - https://www.coindesk.com/web3/2023/05/17/axie-infinity-game-launches-on-apple-app-store-in-key-markets/ 48:45 BASE Maine https://twitter.com/BuildOnBase/status/1661406955158618118 50:10 Pudgy Penguin Toys https://twitter.com/pudgypenguins/status/1659325632499572736 52:40 Do Kwon Bail Revoked https://decrypt.co/142224/terra-founder-do-kwon-back-in-jail-in-montenegro-bail-revoked 53:00 Vitalik Restaking https://twitter.com/VitalikButerin/status/1660356821779988480 https://twitter.com/BanklessHQ/status/1660791568482320390 59:13 Ron DeSantis Bitcoin https://www.trustnodes.com/2023/05/25/let-them-do-bitcoin-says-ron-desantis 1:02:30 Matcha Update https://twitter.com/matchaxyz/status/1661401872811565056 1:04:10 Connext Abstraction https://blog.connext.network/introducing-chain-abstraction-9b8f6e4dc31a 1:05:20 Astaria https://twitter.com/AstariaXYZ/status/1661733590923878401 1:05:50 Jobs https://pallet.xyz/list/bankless/jobs 1:08:20 Questions from the Nation https://bankless.cc/Alpha 1:18:30 Freedom to Innovate https://twitter.com/RyanSAdams/status/1661722723947610114 1:20:30 The Millennial Pause https://www.youtube.com/watch?v=WRYgLsy6kLk Gen Z Shake https://youtube.com/shorts/SsOrbYqiHVs 1:24:15 What David’s Bullish On https://imgur.com/a/U0KHn48 1:27:05 What Ryan’s Bullish On https://twitter.com/ryanberckmans/status/1661719300770615297 1:29:40 MEME of the Week https://imgur.com/Yndq4Xd ---- 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?

  Binance accused of co-mingling customer funds. I'm sure CZ would call this FUD.

• 0:08Ryan Sean Adams?

  Bankless Station, it is the fourth Friday of May, the last Friday of May. David, what time is it?

• 0:14David Hoffman?

  It's the Bankless Friday Weekly Roll-Up where we cover the entire weekly news in crypto, which is actually not that ambitious this week. I would actually call this a slow week, which

• 0:22Ryan Sean Adams?

  Really?

• 0:23David Hoffman?

  I don't think I've ever said that before. Slow week in news, yeah.

• 0:26Ryan Sean Adams?

  Yeah, that's why we have some weird takes in the takes section.

• 0:29David Hoffman?

  Yeah, that's why the takes get kinda weird, yeah.

• 0:33Ryan Sean Adams?

  It's just a sleepy market, maybe? I mean, we called this the boar market before. Is that, is that what we're in for? More the boar market?

• 0:39David Hoffman?

  Yeah.

• 0:39Ryan Sean Adams?

  It's gonna be a boring roll-up, David?

• 0:41David Hoffman?

  It's gonna be a boring, no, it's gonna be extremely exciting. Stay tuned for every single second of it and don't go away.

• 0:49Ryan Sean Adams?

  Well, let's talk about the topics of the week. So continuation of Ledger, Ledger Recover. They're actually capitulating on that. They're postponing it. So we'll talk about that. What else we got?

• 0:58David Hoffman?

  DCG has missed its payment deadline to its own subsidiary Genesis. So we'll talk about what that means.

• 1:07Ryan Sean Adams?

  They're not paying themselves.

• 1:08David Hoffman?

  Yeah, they're not paying themselves. They didn't, they failed to pay themselves $630 million. So what is the fallout of that? We will, we will cover that as well. Tornado Cash, did you hear about this, right? Tornado Cash got hijacked.

• 1:19Ryan Sean Adams?

  I did.

• 1:20David Hoffman?

  A governance attack over Tornado Cash. It's kind of funny just because like it's Tornado Cash, so like,

• 1:28David Hoffman?

  it's gotten hijacked from the nation state and now two people are hijacking it. And then what else, what else we gonna talk about?

• 1:36Ryan Sean Adams?

  We got this Fed report that came out, okay? The Federal Reserve. Did you know one in 10 Americans use cryptocurrency? Who's telling us that? The Fed! We gotta get into this report. There's a ton of really cool stats coming out of that. And also, Binance was accused this week of co-mingling customer funds and company revenue. Got some more info on DoKwon as well. It's some of the bad boys of crypto finishing that up. So look, man, it's still, it's still a good roll-up.

• 2:00David Hoffman?

  Yeah, it's still a week. It'll also be my last roll-up here in Montenegro, right? It'll be the very last one.

• 2:06Ryan Sean Adams?

  Are you gonna miss it? So long, Montenegro.

• 2:09David Hoffman?

  So long, Montenegro, yeah. I, will I miss it? I have, well, my experience here has been great. I want to go home.

• 2:17Ryan Sean Adams?

  You've been away from your home for like months now, right?

• 2:20David Hoffman?

  Eight weeks, eight weeks.

• 2:22Ryan Sean Adams?

  That's eight rollups worth.

• 2:23David Hoffman?

  Since college.

• 2:25Ryan Sean Adams?

  I only measure time in rollups. There's 52 rollups a year. David's been gone in Montenegro for eight rollups.

• 2:33Ryan Sean Adams?

  You're coming home, the next rollup in New York City. That's very exciting.

• 2:36David Hoffman?

  There's gonna be some good old brick in the background. Anyways, gotta talk to our friends and sponsors at Consensus who want to let you know that there is this new tool out on the market called diligence fuzzing to level up your smart contract security. So this is a tool in addition to your regular security audits. Fuzzing is a tool that developers who this ad is targeted towards would probably already know about. You throw a bunch of numbers at your parameters and if any number comes back and it's a bad number, diligence fuzzing from Consensus will figure that out for you. So there is a link in the show notes to go get your contracts fuzzed.

• 3:14Ryan Sean Adams?

  David, I'm sure all the devs really enjoyed that super technical description of what fuzzing is.

• 3:18David Hoffman?

  Because they totally need it.

• 3:20Ryan Sean Adams?

  But do you know what? It was not inaccurate. I think that's exactly what fuzzing actually is. And this is a free tool from Consensus. I hope more solidity devs take fuzzing seriously because we can have...

• 3:32David Hoffman?

  It's a very serious subject.

• 3:33Ryan Sean Adams?

  Yeah, we can't have more smart contract hacks, okay? Not in 2023. DeFi can't take another hit like this. We've been down bad, guys. Let's fuzz all our contracts so this doesn't happen. All right, get to the markets, shall we? Okay, Bitcoin price on the week, what are we looking at?

• 3:49David Hoffman?

  We can count it and that is not a flat week if we really want to. Bitcoin is down 1%.

• 3:55Ryan Sean Adams?

  Better than flat.

• 3:56David Hoffman?

  Start of the week at 26,600, ending the week at 26,300.

• 4:01Ryan Sean Adams?

  26,000, okay. Below 30K still feels bearish to me, just like below 2K ETH still feels bearish season. And this was Bitcoin Miami was last week. Was it, wait, was it last week or did it just finish this week?

• 4:14David Hoffman?

  It was last weekend, yeah.

• 4:16Ryan Sean Adams?

  This is a time to really rally the troops, isn't it? I mean, haven't we seen previously Bitcoin Miami weeks a little bit of a push up, a little bit of a spike? Or is that just all chart noise? Am I making things up?

• 4:28David Hoffman?

  I think last year it dumped.

• 4:32David Hoffman?

  Yeah, conferences tend to dump ETH conferences, Bitcoin conferences. I it's a pattern.

• 4:38Ryan Sean Adams?

  People get together and they get like, they're like, oh, man, this is who I'm surrounded with.

• 4:43David Hoffman?

  No, no, we just, we just throw super dumb, exorbitant parties and we have to sell our assets to pay for them.

• 4:49Ryan Sean Adams?

  Oh, you think that's it?

• 4:51David Hoffman?

  Yeah, all of these events that all the VCs throw, yeah.

• 4:54Ryan Sean Adams?

  Well, it's interesting Bitcoin Miami. I didn't hear much about it. The only thing I heard was kind of the contention and the conflict between the ordinals, the tabloid wizards, or something in the the laser eyes, which is is sort of the the sub tribes of this. If you're in Bitcoin or circles, we had some.

• 5:09David Hoffman?

  But I think that's also mostly online, too.

• 5:12Ryan Sean Adams?

  Yeah, I think that's totally online.

• 5:14David Hoffman?

  Actual conference, yeah. It was, there was no, the things I heard from the Bitcoin conference was that Eric Wall and Udi Wertheimer is going up against the Cyber Hornets, which was mostly an online phenomenon, and then also Ron DeSantis's, no, wait, no, not Ron DeSantis, who's the, who's the Kennedy, Robert Kennedy's speech. Yeah, those are the two things. Yeah.

• 5:35Ryan Sean Adams?

  Okay, and yeah, we're going to talk about Ron DeSantis a little bit later. It seems like there's a little bit of red versus blue on the the crypto thing. It's becoming more partisan. But that's not in the market section. We gotta do some more numbers. All right, ETH price.

• 5:49David Hoffman?

  Sadly, I would count this as flat. We started the week at 18 and 10, 18, 10, ending the week at 1750, down 0.8%. Sorry, Ron, it's flat.

• 5:58Ryan Sean Adams?

  Ratio time, ratio time. Is that flat, too?

• 6:01David Hoffman?

  It's up a little bit, up a tiny little bit.

• 6:04Ryan Sean Adams?

  You know what? Any flat week, I'm going to be sad from now on because I just like, so boring.

• 6:09David Hoffman?

  Did you prefer down?

• 6:10Ryan Sean Adams?

  Apathy, yes. Make up your mind, market. We going up or down? Stop with this tepid temperature.

• 6:17David Hoffman?

  Do something. I'm bored.

• 6:19Ryan Sean Adams?

  I can't stand it. Spew it out of my mouth. Thanks for the crack and charts.

• 6:24David Hoffman?

  Something that is still up only is ETH staking. So Lido had, now, now that Lido, the largest decentralized stake as a service protocol, has withdrawn, enabled withdrawals, we are able to see the final org of ETH staking open up its gate to withdrawals. And so now this is like completely, there's no one left to enable withdrawals. Yet, we are at all time high of stake to eat 21 million. We crossed 20 million stake to eat this this last week. So the acceleration of further eat steak into the beacon chain continues.

• 7:01Ryan Sean Adams?

  Has continued to accelerate.

• 7:02David Hoffman?

  There's two million ether, not $2 million of, there are 2 million ether units waiting to get into the beacon chain, in the validation queue. It would take you, Ryan, if you deposited 32 ether to get to be a staker, it would take you almost 1,000 hours. I don't even know how many days that is. 967 hours to get into the beacon chain.

• 7:28Ryan Sean Adams?

  How many rollups is that?

• 7:29David Hoffman?

  967, about four rollups.

• 7:35David Hoffman?

  Because these things are forever. Because we keep on doing these rants. 40 days. It would take you 40 days to get into the beacon chain.

• 7:41Ryan Sean Adams?

  That's a long time. I mean, 40 days. That's a, that's a lifetime almost.

• 7:46David Hoffman?

  Yeah. It would take you two minutes to exit.

• 7:48Ryan Sean Adams?

  So how are people getting in? They just wait, I guess? They have to be patient?

• 7:51David Hoffman?

  Or you could just buy steak teeth. I bet you there's a premium on steak teeth right now.

• 7:55Ryan Sean Adams?

  When does it stop, David? We're gonna go from 20 to 22 to 25 to 30.

• 8:01David Hoffman?

  30 million.

• 8:02Ryan Sean Adams?

  To, that's when it stops. Isn't this what Justin Drake said recently? He's like, I think it'll probably be like 30 million ish. Where we stop, you know, plus or minus 15%, something like that.

• 8:12David Hoffman?

  Momentum is very strong. The fact that we are like doubling the rate of growth post withdrawals is awesome.

• 8:18Ryan Sean Adams?

  It's gonna stop. This is not an up only chart though. There is some equilibrium. This is some equilibrium that that will be reached. And yeah, I mean, we don't want to see this chart go up only, but for now it's good. Good news for now. You know, we skipped a number, David. Crypto market cap. 1.15 trillion. There, I said it. For completeness. What chart are we looking at with Lido?

• 8:42David Hoffman?

  Yeah, so this is Lido withdrawals after one week. Okay, so a whopping 450,000 ether got withdrawn from Lido. And I'm saying whopping jokingly because, do you know how much ether is actually in Lido, Ryan?

• 8:56Ryan Sean Adams?

  Um, of 20 million?

• 8:59David Hoffman?

  Yeah.

• 8:59Ryan Sean Adams?

  21 million ether? I'm gonna say, what's Lido have like 30% of that?

• 9:06Ryan Sean Adams?

  Something close.

• 9:07David Hoffman?

  You're on target.

• 9:08Ryan Sean Adams?

  Six, seven million, something like this.

• 9:10David Hoffman?

  Wow, nice job. 6.7 million is how much Ether is deposited into Lido. So 530, excuse me, 470,000 Ether got withdrawn. 430,000 of that was Celsius. 40,000 Ether was withdrawn just by like general users.

• 9:27Ryan Sean Adams?

  Oh Celsius, I remember those guys. What are they doing with it? Paying down some debts there?

• 9:33David Hoffman?

  I think, yeah, I think they're selling it.

• 9:34Ryan Sean Adams?

  Refunding some depositors?

• 9:36David Hoffman?

  Yeah, they're liquidating it. Yeah, so Lido, I would say has held up in terms of the snowball effect. I mean, they lost, they lost half a million Ether of their 6.6 million and most of that was Celsius. Rocketpool took the largest share of 7,700 Ether, not that much.

• 9:55Ryan Sean Adams?

  Yeah, not that much. What, so what, what is happening with all the, this Lido, it's not being restaked? It's just going back to kind of Celsius debt holders, I guess.

• 10:04David Hoffman?

  I'm assuming, I'm assuming whoever is doing the Celsius bankruptcy is liquidating the Ether. They're selling it for dollars, right?

• 10:12Ryan Sean Adams?

  Yeah, I, I don't know.

• 10:13David Hoffman?

  I would assume.

• 10:13Ryan Sean Adams?

  I, I'm, by the way, some of this ETH is probably mine, tiny fraction.

• 10:17David Hoffman?

  Yeah, cause you love banks.

• 10:19Ryan Sean Adams?

  I love banks. I love them. Looking forward to never getting that back.

• 10:26David Hoffman?

  They're gonna sell your Ether for you and give you back USDC.

• 10:30Ryan Sean Adams?

  I mean, to be fair though to Celsius, this is probably the best, the most rational place they actually stored their ETH. Cause they put it in all sorts of other.

• 10:40David Hoffman?

  Yeah, they bought, they bought a Bitcoin mining operation. Stupidest thing to do with customer funds.

• 10:48Ryan Sean Adams?

  Oh man, those were the days. I hope we never do that again, like crypto in general.

• 10:53David Hoffman?

  Knock on wood, please.

• 10:55Ryan Sean Adams?

  Okay, um, let's talk about the bigger picture markets, all right? Because the R word, that is recession, was bandied about this week in Germany. A German economy entered recession as inflation hurts consumers. That is the title here. So the German economy is officially in recession under the economist definition of that word, which is multiple quarters of negative GDP. So we're there yet, we're there already in Germany. I get, is this only a matter of time before recession sweeps through other areas of Europe? Comes to the United States. Do you have any takes on that, David?

• 11:35David Hoffman?

  Well, I think the people paying attention to macro all understood that recession is coming globally. It's just a matter of how fast and how hard and for how long. The idea of being announced that we are entering a recession kind of just seems illogical. It's like to a market downturn, like I get by, we need a, we need an arbitrary definition of what a recession is in order to be able to announce that we are in one. But yes, we are having entering a phase of slower growth.

• 12:02Ryan Sean Adams?

  Well, there we are, slower growth. And this is not just slower growth, it's negative growth. That is the economist's definition of recession. Meanwhile, this to me was the chart of the week. This is from Genevieve, a chart on buying versus renting in America. And there's two lines on this chart all the way from the 1970s. This yellow line is the cost to buy in terms of monthly fees. How much does it cost if you are in a house, let's say, or in an apartment? And you own that piece of property versus the cost to rent? That is this blue, I guess, turquoise type line here. And it's interesting how the kind of the, the lines are sort of correlated in that they, they go off together.

• 12:43Ryan Sean Adams?

  But there are these periods of time where the cost to buy far outstrips the cost to rent. And I think these periods of time sort of resemble bubbles, housing price bubbles, for example. So we, we see this one in 2006. That's where the yellow line shoots far above the blue line. So the cost to buy is much more expensive than the cost to rent. Now look at things today, David. And this happened since COVID. We've got a yellow line that has far outstripped the, the blue line. That means the cost to buy right now, 2,700 per month is the average cost

• 13:25Ryan Sean Adams?

  per month for a mortgage versus the cost to rent is 1,850. Why is this happening? I mean, to me, this just looks like asset price inflation, particularly in the housing market, particularly in the property market. And I know this is hitting younger people disproportionately. People in their twenties and their early thirties, never purchased any property, never bought a home. And they're like, I never will be able to do this thing. And you're asking for 10% down, 20% down in order for me to also buy this property? I can't afford it. I'm just going to be. Renting for the rest of my life. That's how it seems to many people in the economy. And I think this has a psychological impact, too. Do you have any thoughts on this chart?

• 14:07David Hoffman?

  Yeah, it's hard for podcast listeners to really appreciate this visual. The so like the cost of buy line deviated away from the cost of rent line like three times in this chart. Once in the 1980s during the mortgage rate inflation of the early 1980s, then a second time in the housing bubble of 2006, and now a third time. And this third time, the most recent time where we are now, is like three times higher than the other two bubbles. The other two bubbles are about the same size. This one's like three times higher. The other thing that's important to note is that even though this cost of buy is accelerating way beyond the cost of rent, the cost of rent is also at an accelerating rate, too. Both are up. And so it just is a graph of like, man, the cost of living sucks right now. It is hard to be alive. Being alive is expensive.

• 14:50Ryan Sean Adams?

  It's getting more and more expensive, and wages aren't rising commensurate as well. Also this week, David, one of the most interesting reports I've seen in a while came out, and you actually put this to the agenda. So why don't you introduce this? Did you know, Bankless listener, that one in 10 Americans uses cryptocurrency? They're holds or transacts in cryptocurrency. Was that report put out by Coinbase, by Kraken, by, I don't know, the Ethereum Foundation? No, the Federal Reserve. This is a report from the Federal Reserve. David, what are we looking at here?

• 15:24David Hoffman?

  So we're looking at a graph of just different metrics and stats about the American population and their relationship with crypto. So here are some important stats. In 2021, this used to be 12%. 12% of people use crypto in any single way. In 2023, now we are down, or 2022, we're down to 10%. So we lost 2% of all Americans, which actually is also bad. Like, in the bear market, like, we got, most people are sticking around. And then there was another poll, why are people using crypto? 21% both said to send money faster and also because the business or person preferred it. 20% of people said because of privacy. Some other interesting stats, white US citizens actually are the least likely to be crypto users.

• 16:07David Hoffman?

  So black, Hispanic, Asian, all coming in with much stronger numbers than than white people, which is interesting. Males use crypto twice as much as females. No, that's not a surprise whatsoever. But I think the punchline is really what you said. One in 10, one in 10 Americans.

• 16:25Ryan Sean Adams?

  That's actually huge. And by the way, when they track usage, this was surprising to me. So as you would expect, the predominant use case is bought or held as an investment. And that was 11% in 2021. It's 8% now. So that's decreased. But the other use case is used to buy something or make a payment. That's 2%. Not insignificant. 2% of Americans are using this to buy or make a payment or sending money to friends or family. And that has not decreased in 2022, which is very interesting. But if you're the Fed and you're looking at these numbers, David, and you're like, oh, interesting. And by the way, this report was not a report on crypto. The report is economic well-being of US households in 2022.

• 17:09Ryan Sean Adams?

  And they have to include crypto now. Why? Because it's tied into economic well-being. It's tied into payments. It's tied into assets. And if you're the Fed and you're looking at this report, you're looking at the numbers, and you're like, oh, wow, 10%? One in 10 Americans are using crypto? This is no longer an insignificant portion of the population that is using an alternative to the banking system that you set up and propagate. No wonder this is starting to enter national discourse and political discourse. Like, it's an important issue. When you have 10% of Americans using something other than the US banking system, I think the banks, of which the most prominent is the Fed,

• 17:51Ryan Sean Adams?

  the central banker of central bankers, have to take notice. And that's what they're doing here.

• 17:56David Hoffman?

  And there's also important to note, the investment use case is outstripping the utility use case. And that's natural, right? The reason why there's more investors is because investors try and predict the future. And so actual utility of these things is going to lag investors. Here in Montenegro, in this crypto community that I've been living with in the last two years, there's people from Africa, crypto people from Africa. And the users of crypto in Africa, like 2% in America? No, no, no, no. Like 20, 30% in Africa.

• 18:24Ryan Sean Adams?

  Are you kidding me?

• 18:25David Hoffman?

  Yeah. Yeah, yeah, yeah. And so it makes sense, like in crypto, where we're well-financialized and well-banked, that like, oh, yeah, only 2%. But like entire continents where we don't really consider like talk about like we don't talk about utility in Africa because it's not like in in the moment of crypto Twitter. Like crypto Twitter doesn't really care about that. But like utility is off the charts and usage is off the charts. And so only in America, I think, do you see investors actually like tripling the rate of actual users. And you can actually see this in the stats. So.

• 18:57Ryan Sean Adams?

  And by the way, David, did you know that Bankless is the number one podcast in Tunisia right now?

• 19:03David Hoffman?

  I just saw that. Number one podcast, number one business and investing podcast, or number one podcast.

• 19:07Ryan Sean Adams?

  Number one business and investing. It might be across all categories too. Now, it's probably not across all categories. It's probably too much. But like number one in business and investing. I mean, Bankless has a pretty, pretty cool African community right now. And there's, you know, some, there's like a Bankless Africa that's really like taking this over. So that is amazing to see. I mean, that is, at the end of the day, why we're here. Be really interesting to see a similar economic well being report in other emerging market areas as well, and what the percentages look like there. I haven't seen that yet.

• 19:40David Hoffman?

  Brian Armstrong had a take about this report. And this is, this report is coming in during the lack of scalability in the crypto ecosystem. And so he tweets out, early days, once layer two really gets going, it will be going like from dial up to broadband. So imagine how much utility we can get when we can get people onto a low fee environment.

• 20:01Ryan Sean Adams?

  That's a great take. Great take. Something else that I feel like is bullish for crypto is this whole AI thing. But before we get to that story, can you tell us about Nvidia? Shares spiked 26% on huge forecast beat driven by AI chip demand. Why'd you pull this into the market section today, David?

• 20:21David Hoffman?

  Well, mainly because it's a slow week in crypto, Ryan. But also, I thought this was particularly interesting anyways. Okay, so Nvidia reports 4.3 billion in sales versus expected 3.9. Where did that come from? It come from demand for its GPU chips from cloud vendors, as well as a very large consumer internet companies, which like to use Nvidia trips to chain and deploy, deploy generative AI applications like OpenAI's ChatGPT.

• 20:47David Hoffman?

  So, okay, so AI is starting to impact equities, the demand for AI, growth of AI, specifically Nvidia. The other important thing, Ryan, I think that was useful and the kind of the punchline of this thing, the market cap of Nvidia as a company went from 755 billion to 973 billion in just in one day, this last, yesterday.

• 21:06Ryan Sean Adams?

  It's almost a trillion.

• 21:07David Hoffman?

  Basically, a trillion dollar market cap. It grew. One Ethereum in market cap.

• 21:13Ryan Sean Adams?

  That's incredible. One Ethereum in market cap is about 220 billion dollars or something like that. That's what Ethereum is right now.

• 21:20David Hoffman?

  Yeah. And which is so dumb because like, all of these AI things that like Nvidia is going to help train and all the open chat GPT, like, what money do you think these companies, these AI bots are going to use? They're going to use Ether.

• 21:34Ryan Sean Adams?

  Well, I think, I think that's what the opportunity is here, right? So like Nvidia sells GPUs and of course, AI models are massive consumers of GPUs. By the way, is the gamer community upset about this? I know they were mad at crypto mining for a while because we're like.

• 21:50David Hoffman?

  Oh, God, the poor gamers. First, like, all the Ethereum miners suck up all their chips. Finally, Ethereum went to proof of stake. It's been, it's been eight years since they've been able to get a GPU. And then all of a sudden, we have this AI revolution. It's like, oh, no, this is going to be way more profitable than you're getting. Oh, poor gamers.

• 22:09Ryan Sean Adams?

  Well, I think the tie in here with crypto is BlockSpace really hasn't had its AI demand moment. Yeah. All right. GPUs have. We're starting to see it here. And look at this, a 26% increase in Ethereum, a $200 billion increase in a real world stock price as a result. I think once the AI start to demand BlockSpace, we're going to see something similar. And we're still a ways ahead of that. I feel like we're maybe a couple of years ahead of that. But I think that is coming as well and will mirror what we're seeing in GPUs. David, what do we have coming up next?

• 22:41David Hoffman?

  Coming up next, Ledger postpones its recover product. Whoo, why? How? Why did that happen? We'll talk about that. And also, Base coming to mainnet, Tornado Cash hijacked, Binance accused of commingling funds, Apple being friendly. Lots of more news to talk about in this weekly. But first, a moment to talk about these fantastic sponsors. That make this show possible, especially Kraken, our preferred exchange for 2023. If you not have an account with Kraken, consider signing up for one. Kraken Pro has easily become the best crypto trading platform in the industry. The place I use to check the charts and the crypto prices, even when I'm not looking to place a trade. On Kraken Pro, you'll have access to advanced charting tools, real-time market data, and lightning-fast trade execution, all inside their spiffy new modular interface.

• 23:22David Hoffman?

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• 24:51David Hoffman?

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• 25:34David Hoffman?

  So after all of the Ledger controversy, Ledger has decided to delay the release of its Recover product. So why did they do this? They heard all the community backlash. They say in this announcement, "We'll release Ledger Recover product as soon as this firmware part of the code will be published." So this is a way for people to actually verify the firmware before people install it onto their Ledger to make sure that it only does the things that it will say that it does when people install it. Interesting take, interesting response. Ryan, what do you think about this?

• 26:08Ryan Sean Adams?

  I mean, my question is happy ending? Question mark. Is this kind of a happy ending? So if you guys missed the last two weeks of this, there's been this massive controversy over this product that Ledger added called Ledger Recover that essentially enables, with your permission, you have to click some buttons on your Ledger, but it enables the firmware with a Ledger software update and an opt-in service called Recover, allows them to basically take out your seed phrase, send it to multiple parties, and store it there so that Recover users, Ledger Recover users, which again is an opt-in service, but it still can be activated, allows quicker recovery. And so, of course, hardcore crypto users, anyone who cares very

• 26:53Ryan Sean Adams?

  deeply about self-sovereignty and keeping their private keys, and the thing that they were sold in the hardware wallet was very concerned about that. It's like, what? This company can actually extract the seed phrase, my private keys, outside of the hardware wallet? Like, isn't this the purpose of the hardware wallet? And now, so here's Ledger. There was massive controversy last week and it spilled certainly over into this week. Now here's Ledger coming out and saying, hey, we're just going to delay that feature like we got it wrong. And they're also saying that they're going to open source most of their operating system, starting with Ledger Recover to make it fully auditable. I hope they open source the firmware as well, or as much of that as possible. I think this pressure, the

• 27:38Ryan Sean Adams?

  reason I said happy ending, question mark, is because it seems like this pressure is actually increasing the motivation for Ledger to open source elements of its tech stack. And I think that additional transparency and accountability is only a good thing for crypto and for this space. Without this controversy, would that have happened? I mean, probably not. So maybe this is turning into a happy ending here. What do you think about that take?

• 28:07David Hoffman?

  Yeah, what I learned from having Charles, the CTO of Ledger on the podcast is that really there is no other way to have maximum, the assurances that the crypto industry wants from his hardware wallets, you can't have that unless all of the updates and all of the software part of the hardware wallet are open source and verifiable by the public. Without that, there's always going to be some trust. And Ledger has stated that this has always been a part of their roadmap. So this actually technically isn't new. The new thing is that they are saying that they are accelerating this and they are also not releasing their Recover product until they have completed some open source milestones as well. So that's news.

• 28:46Ryan Sean Adams?

  I think that's good. All right, David, we got DCG missing a payment to themselves, I think, Digital Currency Group, of course. What is, what's going on? What happened this week? And why is this, this subject relevant?

• 28:59David Hoffman?

  So this goes back to the Genesis, Gemini earn, grayscale, and DCG like mess. And so Genesis had a balance, hole in its balance sheet because it had a bunch of money lent out to Theros Capital who got liquidated. And then that's led to the insolvency or the inability for Gemini earn customers to get their money back. DCG filled the hole. In Genesis's balance sheet by just writing them a loan. And so DCG, but DCG needed to make a payment to Genesis. A $630 million loan to Genesis to fill the hole in the balance sheet. DCG did not pay that when that came due last week. And so what does this mean?

• 29:43David Hoffman?

  This is ultimately going to would be the money to go and pay back Gemini Earn customers and anyone else who is a creditor of Genesis. And so Gemini, this is why this is a post on Gemini's website is because this would also otherwise be their money. There's a handful of groups, the unsecured creditors committee, the ad hoc group of creditors in Gemini are considering whether to provide forbearance to DCG to avoid a DCG default forbearance. I had to look this up, special agreement between a lender and a borrower to delay a foreclosure. And so that is kind of the news this week. Overall, I kind of was going through this news, Ryan, I was like, okay, other than like Gemini Earn customers who are waiting to get their money back,

• 30:25David Hoffman?

  what does this have to do with like, how is this going to impact the crypto markets? And I'm kind of like, meh.

• 30:32Ryan Sean Adams?

  Yeah, I mean, I feel like all of this is known, like we, we know that DCG is not in good shape. We already know there's, there's not really new information here. Is this like some kind of slow motion? Bankruptcy of DCG, some sort of slow motion insolvency? That what's going on? That was kind of my base prediction though, right? Like, I think that's what people expected would happen. Guess what, David? I had some money in Gemini Earn as well.

• 31:00David Hoffman?

  Because you love banks, that's why, that's why you had money there.

• 31:05Ryan Sean Adams?

  Again, not very much bankless listeners, but I tried all of the things at one point in time. And I think that's the big question is there's something like $800 million, $900 million was in Gemini Earn, and this is retail money primarily. And the, the

• 31:23Ryan Sean Adams?

  The folks who have that money, had that money in Gemini earn are just wondering whether they're going to get it back. And I don't think that this story provides any closure to them. It's certainly not comforting to know that DCG didn't pay another $630 million on the scheduled time. So not great news from that perspective.

• 31:40David Hoffman?

  Yeah. So if you guys want to dive down into this detail a little bit more, Rom, former Bankless podcast guest, we've had him on recently twice now, put a great Twitter thread together. I'll summarize it pretty quickly. Basically, he says DCG needs forbearance. They missed the $630 million in payments. DCG does have great assets, but they have a financing problem. Bills are due today, but the cash flow that they have comes over the next few years. Also, there's this additional pressure coming from the inevitability of a Bitcoin ETF. A Bitcoin ETF will come. Whether Gary Gensler approves one, maybe not, but the next chair will. At some point in time, there will be a Bitcoin ETF. And that will really reduce all of Grayscale's, the main cash cow of DCG, their ability to take fees.

• 32:25David Hoffman?

  Because they, Grayscale is charging 200 bips, where an effective ETF from some market competitive thing would more likely be 30 bips. And so fees going into Grayscale would basically go to zero. And so that's Grayscale's, or that's DCG's last remaining big asset. And Rom said he's done a bit of the math. There's just not enough time for Grayscale to generate cash to pay off the $1.7 billion of debt that DCG has.

• 32:53Ryan Sean Adams?

  1.7 billion?

• 32:55David Hoffman?

  Yes.

• 32:56Ryan Sean Adams?

  That's a lot, David.

• 32:57David Hoffman?

  Yes. Yeah. And so the idea here is Grayscale is a cash cow. That time is running short. As soon as there's a Bitcoin ETF, then the fees are just not going to, not going to cut it. And so DCG is like, time is not on DCG's side here.

• 33:11Ryan Sean Adams?

  I feel like everyone's just hoping for another crypto bull market to just paper these things over the mistakes, right? If Bitcoin goes to 100K, then like, you know, probably DCG can afford this.

• 33:23Ryan Sean Adams?

  All right. What have we got? Tornado Cash was hacked. What does that even mean?

• 33:27David Hoffman?

  Okay, so a malicious DAO, tornado DAO governance proposal was proposed. And then that malicious proposal actually got 700,000 votes because there was a sneaky part of that proposal that was not, no one saw it. No one saw the potential exploit, a potential bug. And so this proposer got this proposal to go through, which ultimately allowed a malicious exploiter through governance control, allowed the attacker to basically take over the DAO.

• 33:58Ryan Sean Adams?

  Wait, what's the proposer of this governance proposal? Was that the hacker?

• 34:02David Hoffman?

  That was the hacker. I would imagine so, yes. Yes. A malicious governance proposal, I'm assuming. Yeah, so the governance proposal allowed the attacker to grant themselves 1.2 million fake votes after it got 0.7 million legit votes.

• 34:20Ryan Sean Adams?

  So what does that mean? Recap recap on tornado cash. Okay, so it is a privacy protocol, of course, that US citizens cannot use. Thank you, OFAC. But it's a privacy protocol, kind of a mixer. You put your ETH in if you want to sort of anonymize it and you can get it out. And of course, we've talked about this a lot, but there's a governance component to this protocol. And there's a token called torn, T-O-R-N, that is the governance token behind this protocol. Is that the part that was hacked, the governance protocol itself, not the smart contracts with all of the mixed ETH in it? Am I correct about this?

• 34:56David Hoffman?

  That is correct, yes. So the actual pools are not affected because they are completely like cut off from exploitation by the governance. Tornado Cash governance has no governance over the pools. They are their own like self-sovereign smart contracts on Ethereum. And so the individual pools are intact. So what the attacker can do is withdraw all the locked votes and drain all the tokens in the governance contracts. So there's some funds, treasury funds, and then also some torn tokens. And so those got exploited. Now basically the torn token is going to zero. And that's basically the story. I mean,

• 35:34Ryan Sean Adams?

  I mean, does this kill tornado cash?

• 35:38David Hoffman?

  Yes, it well, so the one of the functions of tornado cash governance was the relayers, which is how people actually achieve privacy. So like when you withdrew your ether from tornado cash, you need to process that as a transaction. Who pays for the gas fees? If you pay for the gas fees, then you actually just dox yourself again. So this makes it pointless. So a relayer would process that transaction for you. And that was up to governance, I think. Yeah. Anyways, governance over tornado cash is dead, pools are still intact, TBD on really what happens next.

• 36:08Ryan Sean Adams?

  I mean, it's not, and who was the attacker? It's like the CIA attacking it? I mean, there's reports that this was the North Korean group, or are they called again?

• 36:17David Hoffman?

  Lazarus.

• 36:18Ryan Sean Adams?

  I'm talking.

• 36:18David Hoffman?

  Why would they attack tornado cash, though? Because they love tornado cash.

• 36:22Ryan Sean Adams?

  I don't know. Who knows what's going on? PSYOPs?

• 36:26David Hoffman?

  It's an interesting case study in exploitative governance attacks, which is a thing that we've known about and now.

• 36:32Ryan Sean Adams?

  It's a security hole, isn't it?

• 36:34David Hoffman?

  Right, right. But I mean, it's also why, like, but we did know that tornado cash privacy pools are, were cut off from this. And so that's been the way that they've been designed. Other systems like this are designed, like Uniswap governance, if Uniswap governance got exploited, there, this funds in Uniswap would be completely safe because of the same principle.

• 36:54Ryan Sean Adams?

  Yeah, but it does some funky things, like it's sort of, I don't know, you can't govern the thing anymore? You can't upgrade it? All sorts of bad things happen.

• 37:02David Hoffman?

  I mean, it's especially weird when like tornado cash governance philosophy was supposed to be very, and is very, very separate from the after products. Same thing with Uniswap. It's like, oh, governance got exploited. Oh, no. Oh, no. We can't govern tornado cash anymore.

• 37:16Ryan Sean Adams?

  All the torrent tokens went to zero.

• 37:18David Hoffman?

  It's maximally ungovernable.

• 37:19Ryan Sean Adams?

  I think what's, what's really fascinating about this is that's a story, but it's like, who is the attacker? The identity of the attacker, what the motivations are there? This is one of the most interesting set of smart contracts on Ethereum, given kind of the geopolitical confrontation about it. It's the only, only set of smart contracts on the OFAC sanction list. All right, Binance accused of co-mingling customer funds. So mixing customer funds and company revenue together. That's a story that Came out of Reuters this week, a special report. I'm sure CZ would call this FUD, David, but what are the details of this story?

• 37:56David Hoffman?

  So the accusation, the details are that Binance co-mingled customer funds and also profits and company money into the same accounts. Interestingly, at Silvergate Bank, I did not know Binance had an account at Silvergate. This was before it collapsed, of course. So customer dollars flowed into Silvergate and then also profits and also come to customer, company money also flowed into the same account at Silvergate. So big accounting no-no. Best case scenario is that is just a big accounting no-no. I mean, I think one of the reasons why this is news is like the last time that we saw co-mingled customer funds, it was FTX.

• 38:34Ryan Sean Adams?

  Yeah. And the last founder CEO said, oh, that's just FUD as well. Remember that guy? His name is SPF?

• 38:41David Hoffman?

  Yeah. So if you look into the story, you'll see like customer flows, customer funds flowed into Silvergate. And then that went into a firm in the scalyish called Key Vision, which was controlled by Binance by CZ. But basically this is, this is the story, co-mingled customer funds. They found no evidence that client money was taken. But the idea is like in the FTX story is like, yeah, customers funny money wasn't like taken or stolen. They was just liquidated because they were trading. So no one really knows. Now it's a black box. And so it doesn't really do anything to help the narrative of Binance as a big black box.

• 39:16Ryan Sean Adams?

  It certainly doesn't. It's more of a black box. I hate that we're in the position of like, we have to actually kind of trust CZ. And of course CZ is saying four to this, right? It's more FUD. Basically, and if you don't know what four means, we actually recorded an episode with CZ where he kind of explains that. That's coming out Monday and you can get his takes on this and some other things. But I guess what, what do we know? Binance is still standing.

• 39:42David Hoffman?

  Yep.

• 39:42Ryan Sean Adams?

  After the, the 2022 and 2023 bank runs. All right. So they didn't go under.

• 39:50David Hoffman?

  They processed $17 billion of withdrawals in the week that people tried to do the run on Binance.

• 39:56Ryan Sean Adams?

  Right. So.

• 39:59Ryan Sean Adams?

  They may be doing something. We have no idea. We have no idea. They weren't doing it to the extent that Sam Bankman-Fried was and FTX was, right? I do wish we had better proof of reserves in place. And that's a question we asked CZ. He kind of said that wasn't the full answer, but like, we need better proof of reserves for the crypto exchanges. We need better audits. We need better records.

• 40:29Ryan Sean Adams?

  I don't know how much you can trust a Binance. I mean, my answer to this is you got to use multiple crypto exchanges. That's always the way. And you don't keep your funds on a crypto exchange, guys. Public bathroom. Go into your business, get out. That's what you should be doing. And so you're not put in this place of having to trust a crypto bank, at least at an individual level. At the same time, David, I don't know if all of the critics are right on Binance. Like, there is this notion that Binance and CZ are just as corrupt as another SBF. Certainly, that's a popular notion in the US.

• 41:08Ryan Sean Adams?

  But then we have Operation Choke Point. How difficult is it to actually get a bank account in the United States? Maybe there are some reasons, not necessarily for co-mingling funds, that's probably always unjustifiable. But maybe there are some reasons that the backend looks messy. It's because it's very difficult to come into the light and actually get a regulated bank account in the United States. So I don't really know who to trust in this situation. And I hate that we are in this position in crypto. And there's certainly some blame on the CZ side, the Binance side of things to go around. But there's absolutely some blame on the US regulatory apparatus side. And they haven't made this easy. They've just pushed more into the dark.

• 41:52Ryan Sean Adams?

  I mean, we have Wells notices going to Coinbase, who... Has been domiciled in the US from the very beginning and has been kind of the student in the front of the class, straight A student, always saying, yes, teacher, I'll do that whatever you need, like being very regulatory compliant. And they are having trouble with the current administration, the current regulatory apparatus in the US. If they can't do it, I mean, we got a real problem. So that's my take. It's not necessarily satisfying right now because I don't know who to trust and who not. There's, there's not sort of a very clear binary about this, but that's all I got. What do you think?

• 42:32David Hoffman?

  Yeah. We talked about this in the podcast, like Binance and Tether are these two very large systemic components of the crypto industry that are just flood magnets. Everyone wants to flood them. And like anytime I see like the next tether FUD, scroll across my like Twitter feed, I just keep on scrolling because like, it's been that way ever since I've gotten to crypto. There's always been tether FUD. And now it's starting to be like, oh, now there's is Binance FUD, Binance FUD, Binance FUD, Binance FUD. And like, the only reason why I know to scroll past tether FUD is because like, it's always happened and nothing's ever come to pass. And it's starting to be that way with Binance too. But it's only, the only reason why that's, I keep on scrolling is because every other time, it's always passed. That's the only reason I've got. Not that I know

• 43:17David Hoffman?

  anything. I was just like, oh, the other FUD never came to be.

• 43:22Ryan Sean Adams?

  Do you trust tether enough to store your staple coins in tether? Or do you choose a different staple coin?

• 43:26David Hoffman?

  I don't, I've never held tether for like more than a day or whatever.

• 43:30Ryan Sean Adams?

  And why is that? Is it because you don't trust them to the extent you trust other staple coins?

• 43:35David Hoffman?

  There's better options. Yeah.

• 43:37Ryan Sean Adams?

  That's how, that's the way I have always felt. That's also the way I feel about centralized exchange choices. And I think there's still where we are in this, in this industry, in this stage, is to be a crypto user, you are in the Wild West, in the Journey West. You can't trust anybody. You have to like be educated about this stuff. And you have to make discerning choices. So if it smells bad, even if it's not entirely bad, you don't know, just don't put your eggs in that basket, or just only put a few eggs in that basket. Speaking as a former Celsius user, you know? And I had like very little in that, right? And it was just kind of a test,

• 44:21Ryan Sean Adams?

  and very intentionally so, because bad stuff can happen in crypto.

• 44:26David Hoffman?

  I mean, it's fun. It's fun week. All right, moving on. Coming up next in the rest of the news, base on mainnet soon TM, pudgy penguins on Amazon. Got toys, NFT toys on Amazon, actually following through with his roadmap. That's pretty cool. And then also, could restaking mess up Ethereum? A new Vitalik article just drops about his concerns about restaking, which Ryan and I will unpack. So all of that news and more. But first, I want to talk about these fantastic sponsors that make this show possible, especially MetaMask. If we have used any weird jargon that is esoteric and niche and needs explaining, and we forgot to explain it, then MetaMask Learn is for you. Let's go hear from them. Learning about crypto is hard, until now. Introducing MetaMask Learn,

• 45:11David Hoffman?

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• 45:54David Hoffman?

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• 46:35David Hoffman?

  One or two. Mantle is the first layer two built by a DAO and is backed by one of the biggest DAO treasuries in the world. BitDAO. Mantle already has sub-communities from around Web3 on-boarded to help the growth of Mantle. Like Game7 for Web3 gaming, or EduDAO for the world of D-Side, and Bybit for TVL, liquidity, and OnRamp. Check out Mantle at mantle.xyz and follow them on Twitter at ZeroXMantle. Apple, the Web2 mafia, starting to actually give some green lights to some crypto apps. So we got two reports, but one out of Stepin and one out of Axie Infinity, that their in-app crypto features that involve trading or buying or selling of crypto assets

• 47:18David Hoffman?

  got approved and are not paying the 30% fee.

• 47:21Ryan Sean Adams?

  What?

• 47:22David Hoffman?

  Pretty cool.

• 47:23Ryan Sean Adams?

  I wonder if they had to kiss the ring to the mob boss?

• 47:26David Hoffman?

  I don't know. So Stepin announced the integration of Apple Pay as the first blockchain game users can buy, sell, and trade Stepin NFT sneakers in the app and pay for them with debit and credit cards linked to Apple Pay. And so you can purchase Spark Credits, which I think is an internal currency to Stepin. And then Spark Credits is one USDC. And so USDC is in this app that is approved by Apple. And so, and then also similarly, Axie Infinity has also gotten its app approved.

• 47:55Ryan Sean Adams?

  Finally, after years of them trying this, Axie Infinity game launches on the Apple App Store in key markets. I guess maybe there's a thawing going on in the Cold War between crypto, Web3, and Apple, at least hints of this. I hope it continues. Apple has been a massive gatekeeper. I mean, Uniswap, the wallet, couldn't even get approved for the longest of times. This seems like good news to me.

• 48:20David Hoffman?

  Yeah, I mean, that Apple's got a lot of users. It would, it makes absolutely zero sense for them to charge 30% on every single blockchain integration. And so it was either no blockchain at all in the app, in the Apple iOS Store, ever. Or they let loose. And so finally, maybe there's a turning of the tides.

• 48:40Ryan Sean Adams?

  Maybe. I'd like to see more of that before we can say it's a trend, but it's good science.

• 48:45David Hoffman?

  Base mainnet Coinbase's base layer two built on the OP stack is coming to mainnet soon TM. There is a set of criteria that will unlock the mainnet launch, a successful hard fork of their testnet, another successful infrastructure review with OP Labs. OP mainnet must upgrade to Bedrock, which is also soon TM. We talked about that last week. And then completion of audits with no critical issues and some testnet stability. Once all these things happen, then we're going to see the base mainnet launch. And the testnet's been up and running. And so all of these applications that have been building on the testnet are just, they're just going to be ready to go. So the theme park that is being built is going to have rides on day one.

• 49:27Ryan Sean Adams?

  Well, and let's just remind Bankless listeners as well, this is the first time a major centralized exchange has launched a layer two, the very first time, history being made here, I think. We even asked CZ about that. Hey CZ, you're going to turn the BNB chain into a rollup?

• 49:45David Hoffman?

  You know, you remember what he said?

• 49:47Ryan Sean Adams?

  Well, no, no, no, we should tease it. The answer, guys, is coming on Monday when we release the podcast.

• 49:53David Hoffman?

  He, I'm going to tease it. He did say, uh, the BNB team has thought about layer twos on Binance chain. I'm like, that's not what I asked CZ.

• 50:04Ryan Sean Adams?

  Well, you can hear that answer coming up on Monday. David, some cool stuff in the NFT world, at least, I think so. Pudgy Penguins smashes their Amazon debut. Are we looking at a commercial here for Pudgy Penguin toys?

• 50:18David Hoffman?

  Yeah, Pudgy Penguin stuffed animals.

• 50:21Ryan Sean Adams?

  Is this worth playing? Should I play this?

• 50:22David Hoffman?

  Teddy bears, but Teddy Penguins.

• 50:24Ryan Sean Adams?

  It's kind of weird.

• 50:27Speaker 02

  Julie, it's time to go.

• 50:30Ryan Sean Adams?

  Oh, that's them on the floor.

• 50:33David Hoffman?

  It's a big Toy Story looking commercial right now. Oh, it is. Oh, they're waking up.

• 50:36Ryan Sean Adams?

  They come alive.

• 50:39Ryan Sean Adams?

  So cute.

• 50:44Speaker 03

  All right, Pingers, coast is clear. My back was starting to hurt.

• 50:49David Hoffman?

  Okay, this is a Toy Story ripoff.

• 50:52Speaker 03

  Does anyone see my hat?

• 50:56Ryan Sean Adams?

  We don't have to watch more, David. Do you have a penguin?

• 50:59David Hoffman?

  I'm curious.

• 51:02Ryan Sean Adams?

  The kid's coming back.

• 51:07David Hoffman?

  Oh, she only took one of the NFTs. Well, clearly she's got a favorite.

• 51:14Ryan Sean Adams?

  It's the highest, uh, highest market value.

• 51:17David Hoffman?

  Wow, okay. All right. Well, here's, here are the stats. $500,000 of Pudgy Penguin stuffed animals were sold in the first week, in the first two days.

• 51:29Ryan Sean Adams?

  That seems too good.

• 51:31David Hoffman?

  That seems like, yeah, that's, that's because like NFT market caps aren't that high. They're in the tens of millions of dollars. Maybe, maybe Pudgy Penguins is over 100. I don't know. Um, 20,000 individual stuffed animal Pudgy Penguins were sold. Dominated the charts of Amazon sales, beating brands like Disney, Transformers, Pokemon, Barbie and Legos.

• 51:50David Hoffman?

  Pretty crazy. Who, who's buying all these things?

• 51:53Ryan Sean Adams?

  Is it kids? Are we turning kids into degenerate NFT gamblers?

• 51:57David Hoffman?

  Or is it us?

• 51:59Ryan Sean Adams?

  Uh oh, I don't know what's more concerning.

• 52:03Ryan Sean Adams?

  I guess, uh, stuffed animals, nothing wrong with stuffed animals. If you're, you know, a grown adult.

• 52:08David Hoffman?

  20,000 individual toys sold. Well, there's only 10,000 Pudgies. So even if every single NFT owner bought two, that's, that's, that's how that would come out to be. All right. Congrats to the Pudgy team for executing on the road mom next shop.

• 52:19Ryan Sean Adams?

  Yeah.

• 52:20David Hoffman?

  It'd be pretty crazy to see like a new toy enter the children's world and it actually started as like a degenerate NFT part project in the bull market.

• 52:29Ryan Sean Adams?

  Crazy, but not like, that wouldn't surprise me at all. I mean, there's something that would, okay, yeah, that's, that's, seems about right. I could totally see that happening.

• 52:40David Hoffman?

  Uh, okay. All right. Moving on. Uh, Do Kwan, our favorite person who's just down the street from me in Montenegro, uh, is back in jail. His bail got revoked. He was on, uh, he was freed on bail for, for like a really low number, like $450,000. And then a judge has revoked that and now he's back in Montenegro in jail. And that's the story.

• 53:00Ryan Sean Adams?

  Okay. Uh, sorry, Do. No interview on Bankless.

• 53:04David Hoffman?

  No interview, you know?

• 53:05Ryan Sean Adams?

  David, did you read this article? Uh, it's entitled, "Don't Overload Ethereum's Consensus" from Vitalik Buterin. And he was really talking about restaking here, which has been a theme we've been talking about a lot on Bankless. And I think the subtext of this theme, these are not the words Vitalik used, but it's basically, could restaking? Hurt Ethereum? Could it kill Ethereum? Could it really damage the protocol? And what's kind of your TLDR of his post? Of course, Vitalik does a great job putting it in his own words. But if you were to kind of synthesize this for us, what would you say he's trying to communicate in this post?

• 53:41David Hoffman?

  So just to briefly explain restaking. Restaking is when you take your ETH stake. You have staked your ETH to the Ethereum main chain. Restaking allows you to take that same ETH that's already staked to Ethereum and then also sign up for additional slashing conditions for a separate and new network. And so say there is an oracle network that would also like your collateral as a bond to make sure that you correctly report the price. You can restake your ETH to that new oracle network and then you can get fees from that oracle network. And then if you lie to that oracle network, your ETH that's also staked to the Ethereum beacon chain will also be slashed. In theory.

• 54:17Ryan Sean Adams?

  So what's the problem?

• 54:18David Hoffman?

  In theory, you could actually layer this restaking on over and over and over again for juice up yields. And then people are like, oh, wait, that's a lot of slashing conditions. Is that harming the security of Ethereum? And Vitalik is like, no, that doesn't necessarily harm Ethereum unless whatever these new networks are, if one of them starts to be systemically important at the social layer. And so at the hardware layer and the objectivity layer, there is no, it's like the restaking and restaking and restaking, the layering on of new networks, that doesn't intrinsically threaten Ethereum consensus. What it would do is something like the 2016 DAO hack,

• 55:00David Hoffman?

  where if one of these networks has a lot of restake and something bad happens on that network that's separate from Ethereum, then because that one network got so large and it had so much restaked ETH to it that it became systemically important at the cultural level. And then that restaking chain that got exploited would then ask for a rollback of, or a hard fork of Ethereum.

• 55:23Ryan Sean Adams?

  It's, you know what?

• 55:24David Hoffman?

  That is very dangerous.

• 55:25Ryan Sean Adams?

  2016 is a perfect analog to this, right? So is 2008 banking crisis. I mean, the intrinsic problem is too big to fail. When something becomes too big to fail, and so the stakeholders at the social layer all agree, wow, this has become too big to fail. And if it fails, there'll be such social cost to a particular set of stakeholders that we politically care about, that we need to bail them out. And then they go about that bailout process? That's when things have this really negative externality in being too big to fail. And Vitalik is saying, I am concerned, unless we kind of guard at the social layer around

• 56:09Ryan Sean Adams?

  this, that that could happen with restaking. And so you designers of restaking, make sure you're doing it correctly. Make sure you're doing it well. Make sure you're doing it without introducing this hazard into the social layer of Ethereum. And if it becomes too big to fail, and there's the prospect dimension of some sort of a bailout, that's when things move from like, you know, yellow to orange to closer to red. I think that's what he was communicating in the post, at least to me. And you could see all sorts of possible designs. And it's not just, you know what? It's not just staking that could do this. I could also see if you had a layer two that got kind of too big to fail or something.

• 56:54Ryan Sean Adams?

  Let's say a layer two, too big to fail had, I don't know.

• 56:57David Hoffman?

  Layer two broke, a bridge broke or something.

• 57:00Ryan Sean Adams?

  Yeah, 20% of ether on it.

• 57:02David Hoffman?

  If Arbitrum bridge broke and all of the ether that's deposited to Arbitrum somehow was not able to be withdrawn from Arbitrum in some weird way that we didn't expect, would we roll back the chain? It would really hurt to not roll back the chain, and I don't think the Ethereum community would do it.

• 57:20Ryan Sean Adams?

  You think they wouldn't do it.

• 57:22David Hoffman?

  It would not do it. And it would hurt. It would hurt to do, to not do it.

• 57:25Ryan Sean Adams?

  I agree.

• 57:25David Hoffman?

  It would take that to the face.

• 57:26Ryan Sean Adams?

  And also because of fork choice rules, there would be a significant faction that actually want to fork ETH in that situation. I would expect. I think, I think it would be a contentious thing. I think there'd be a battle. I think it could be somewhat like the DAO in that you'd have a group who says, yeah, no rollbacks, never. And then if it was big enough, and if you don't think that would qualify Arbitrum Bridge, just imagine something bigger than David, like more, more ETH, more substantial to the ETH validators or whoever's kind of making the political decisions of Ethereum. You could, you could see a world where that could happen. What's interesting though about it is, let's say there was some, some event like that and it did happen and there was a fork, right?

• 58:10Ryan Sean Adams?

  It's always interesting with a fork is ETH holders always end up with double the assets, don't they? I guess unless there's some sort of a fork.

• 58:18David Hoffman?

  Oh, well, so hold on.

• 58:20Ryan Sean Adams?

  I mean, you can, and I think that's great.

• 58:23David Hoffman?

  Have you collected your Ether proof of work tokens, Ryan?

• 58:26Ryan Sean Adams?

  No, I mean, but that's a, just not a serious legitimate fork, right? I certainly collected my Ethereum Classic and then I had the choice whether I, I wanted to continue Ethereum Classic or whether I wanted to sell it. And I think I, along with the majority of the Ethereum community, sold Ethereum Classic and doubled down on, on a regular old Ethereum. And anyway, what I'm saying is that's actually like the ultimate remedy for governance is if things got too contentious, if there was some sort of too big to fail type event and there was a fork, then all the stakeholders have to decide. Like it's very messy.

• 59:04Ryan Sean Adams?

  That's not like what we want to happen, but I'm just pushing it that to the logical conclusion and it's still not the end of the world, I guess is what I'm saying. Speaking of forks, there seems to be a bipartisan fork here recently. This is Ron DeSantis. He announced his candidacy as a Republican presidential candidate. And he says this, "You've got every right to do Bitcoin, to do Bitcoin." I love that. "The only reason these people in Washington don't like it is because they don't control it. Let them do Bitcoin," says Ron DeSantis. That's interesting how there's been a growing set of Republicans that have taken the posture of being anti-CDPC and pro crypto.

• 59:48Ryan Sean Adams?

  Meanwhile, it seems like the Democratic establishment, not all of them, of course. In fact, we've had Democratic members of Congress on bankless in the last couple of weeks. But there is a contingent of establishment, I think Democrats, maybe Elizabeth Warren and her ilk who are pushing hard against crypto.

• 1:00:05David Hoffman?

  Biden and friends.

• 1:00:06Ryan Sean Adams?

  I would say the Biden administration is one of them. This is Joe Biden. When he speaks about crypto, he says things like this, and this is him last week. "I'm not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistance at risk." Of course, I personally don't want to put food assistance at risk, but incorporating crypto traders with wealthy tax cheats is some political grouping that I don't appreciate and I don't like. So I'm wondering if this partisan divide will kind of increase. It does seem like if one party doubles down on an issue, and Ron DeSantis is kind of

• 1:00:47Ryan Sean Adams?

  making this part of his presidential announcement, "You've got every right to do Bitcoin," he says, then the other party has to just be like, "Oh, they're doing this, so we're going to do the exact opposite." I just worry about that. I don't even know if they've thought about this from a fundamentals, like, you know, base principles perspective. I don't even know if Ron DeSantis does. I don't even know if he cares. He's just like, "Oh, here's a crypto cohort. They have some money. They have some influence. I can get behind this issue, maybe, and so I'm going to be pro crypto." And then Democrats see the pro crypto Republican, and they're like, "They're pro crypto? We're going to be anti crypto." And no one actually has a conversation about this and looks at the base principles of,

• 1:01:29Ryan Sean Adams?

  like, you know, the things that we all care about or all have in common. That's my bare case for this, David. I don't know if you see that, but I'm worried about this.

• 1:01:37David Hoffman?

  Yeah, your bare case is that political theater is just political theater.

• 1:01:40Ryan Sean Adams?

  Yes.

• 1:01:41David Hoffman?

  The idea, one of the cool things about crypto is that when you deeply understand crypto, you go down the crypto rebel, you go navigate the dark force of crypto, and you come out the other side, understanding how so much more of the world works. And then you see the politics be like, "Oh, there's this new important thing." And then the left and the right, the red and the blue, people just like squabble over it now, regardless of the fundamentals. They don't give a shit about our industry. They're like, "Oh, now we fight over this thing. Who wants that? Oh, my God."

• 1:02:09Ryan Sean Adams?

  Yeah.

• 1:02:10David Hoffman?

  I do like the idea of Ron DeSantis saying, let them do Bitcoin using Bitcoin as an idea, not an actual noun. Like, let them do Bitcoin using like-

• 1:02:20Ryan Sean Adams?

  How intentional do you think that was?

• 1:02:22David Hoffman?

  I don't think very intentional.

• 1:02:24Ryan Sean Adams?

  Okay.

• 1:02:25David Hoffman?

  I don't think very intentional.

• 1:02:27Ryan Sean Adams?

  Oh, wow. Well, crypto is still continuing to build. David, we've got some releases this week. The first from Matcha. Let's just show the interface. This is really cool. And of course, I can log in with MetaMask as I already have. But Matcha, of course, is a decentralized exchange aggregation service. And in the background, you know, like decentralized exchange market share? David, we haven't shown this on the roll up in a while, but market share of DEX volume to centralized exchange volume. Centralized exchanges are losing market share to decentralized exchanges recently, and that's been huge. But like, look at this. This is Matcha, the new user interface. The really cool thing about it is this, the search, token search functionality.

• 1:03:07David Hoffman?

  I have never seen a well-functioning token search in a UI before.

• 1:03:13Ryan Sean Adams?

  What do you want? What do you want to buy? Some arb?

• 1:03:15David Hoffman?

  Oh.

• 1:03:15Ryan Sean Adams?

  Boom, it's there. And Matcha, of course, is a decentralized exchange aggregator, so it's going to find you the best liquidity across all of it. Anyway, all I'm saying is the user experience, we, here's what I'm saying. We have 10% of Americans that hold crypto or using crypto today, and the UX has been historically kind of bad. What happens when the UX gets 5X better and 10X better? Cool things are going to happen, and we're on the cusp of that. And you can see that when you, when you see releases like Matcha that are happening pretty quietly in the background.

• 1:03:48David Hoffman?

  Yeah. This isn't just a front-end UI upgrade, though. They also have some protocol upgrades, faster trade confirmations. They say they've reduced failed trades by 85%. They are still paying your gas fees, although you are still paying it in a roundabout way. But yeah, at least you don't have to pay ETH, which is nice. And then they've indexed 3.7 million tokens to enable that.

• 1:04:08Ryan Sean Adams?

  3.7 million?

• 1:04:09David Hoffman?

  That's a lot of tokens.

• 1:04:10Ryan Sean Adams?

  Yeah. Coming up on releases, Connect has released chain abstraction. So we've

• 1:04:15David Hoffman?

  talked about account abstraction, but Connect is doing this thing called chain abstraction. And so if you want to, say you have like USDC on Arbitrum, and you want to send that USDC to Polygon to deploy it in Aave, and that takes you like- Six transactions. Ooh, and then if you get over to Polygon and you don't have any Matic in your wallet, then your USDC is stuck until you get some Matic in your wallet. Chain abstraction does the same thing as account abstraction does for smart contract wallets, but now we have like smart bridges. So you can bundle up all of these transactions all at once and then have that bridge and transfer and action on both chains done in one single transaction through Connect, which is a bridge, by the way. Connect is a bridge. And now they are doing this thing called account abstraction. So fewer steps to get what you want done across

• 1:04:58David Hoffman?

  the chain. Really, this fits into the theme of like Ethereum and its multi, its layer two strategy. All the Solana people are like, oh, you guys are breaking Compostability, it's breaking UX, blah, blah, blah. Well, the Ethereum people and like the layer two, layer three, superchain people are like, yeah, but eventually all that will be abstracted and it'll just be one unified superchain. And this is part of that journey, chain abstraction.

• 1:05:20Ryan Sean Adams?

  There you go. Chain abstraction. Builders you're building. That's what I get from this. Last one here is Astria.

• 1:05:26David Hoffman?

  Astria.xyz is a NFT backed lending protocol. So NFT in, borrow USDC or some other token out. This is from Joseph DeLong of former Sushi Swap fame. And so if you are into the world of NFT phi, Astaria is for you.

• 1:05:42Ryan Sean Adams?

  Yeah, I think I said Astria.

• 1:05:44David Hoffman?

  Weath.

• 1:05:44Ryan Sean Adams?

  Astaria.

• 1:05:45David Hoffman?

  Astaria. Astria. Astaria. Astaria. It's definitely Astaria.

• 1:05:50Ryan Sean Adams?

  There you go. Got some jobs of the week here.

• 1:05:52David Hoffman?

  Jobs.

• 1:05:53Ryan Sean Adams?

  What are we looking at? David? Otter Space, Web3 front-end engineer.

• 1:05:58Ryan Sean Adams?

  Bankless Ventures needs an investment analyst intern. Coinbase needs a staff blockchain engineer, staff smart contract engineer, Phantom, a software engineer for mobile and for front-end, Uniswap Labs, a senior backend engineer. We got all the jobs for you on the banklist.pallet.com job site. David, what do we have coming up next?

• 1:06:17David Hoffman?

  Coming up next, we got questions from the nation. Somebody asked in the Discord, what are settlement insurance is? And man, I'm so glad they asked that question. I love that. And then also, what's the difference between the 2019 bear and the 2023 bear? As well as some hot takes from crypto Twitter and what David and Ryan are bullish on. So we're going to get to all of that and more. But first, a moment to talk to some of these fantastic sponsors that make this show possible. Immutable is at the forefront of Web3 gaming, on a mission to bring digital ownership to every player, offering the world's best games and game development platform. Immutable lets game builders and players focus on great gaming experiences. So, build your next Web3 game on easy mode with Immutable's leading full-stack Web3 gaming platform. Its built-in UX features, like the Immutable Passport,

• 1:06:59David Hoffman?

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• 1:07:42David Hoffman?

  And it's drawing more and more attention from regulators and governments. But, there is good news. Toku is here. Toku is the first employment and compensation platform for the crypto industry that makes this easy. Toku helps you hire employees or contractors and pay them in fiat or crypto legally, compliantly, and with all the taxes handled in over 100 different jurisdictions. So whether you're an early-stage company with just a team of two, or you're an enterprise with 200, Toku has a solution that meets your needs. Toku is already working with the leading companies in the space: Protocol Labs, Hedera, Gitcoin, and many more. So, transform your employment and token payroll operations with Toku. You can reach out to Toku at toku.com/banklist or click the link in the show notes.

• 1:08:24Ryan Sean Adams?

  Question this week from Tadzu. In your episode about finality issues of the beacon chain last week, you used the term "settlement assurance" multiple times. Can you please explain this term further? Thank you. David, is this your alt account that asks this question? It feels like it's teeing you up just to talk about settlement assurances, which I know it's something you're passionate about. So tell us, now's your chance. Tell us, what are settlement assurances?

• 1:08:48David Hoffman?

  Yeah, so this is actually very deep in bankless lore. I'd say there was a time where we really focused on this thing called settlement assurances and also public goods. I wrote an article called "Settlement Assurances and the Global Public Goods Thesis", all of these things kind of tying together. So this is like actually a really deep part of like bankless philosophy, I'd say. The importance of settlement assurances. And back in like 2017 when I was getting into crypto, like people were still getting confused about like Litecoin versus Bitcoin. Like Litecoin is Bitcoin, but faster and better. Like, yeah, Litecoin's blocks are four times faster, but is the important thing about crypto is that when you make a transaction, it is final. It is in the blockchain.

• 1:09:29David Hoffman?

  And so like, yeah, you could make a Bitcoin and you could spin up so it has 10 trillion transactions a minute. Is that what makes blockchains faster, though? Can you just have faster blocks to make transactions more final? In the concept, in the world of settlement assurances, the answer is no. And so because Bitcoin's proof of work, its hash rate is like hundreds of times faster than Litecoin, technically, even though Bitcoin is a slow blockchain, its transaction finality is the fastest that is out of any blockchain that exists. At least that's when I wrote it back in 2017. Ethereum proof of stake and finality is actually now the new fastest, because it takes six minutes to have billions of dollars of settlement assurances. So you know that your transaction is in the chain,

• 1:10:13David Hoffman?

  or else there will be tens of billions of dollars of ether burned if your transaction gets unwound. So Litecoin can't hold a candle to Bitcoin's finality just because it has faster blocks. Now, settlement assurances also goes back to the trad payment rails, right? Except in the trad payment rails, you get settlement assurances from the court system. So to undo a transaction in the trad world, like you can go and undo an ACH transfer at any arbitrary time. There is no finality in the trad world. There's finality in the crypto world because we operate by crypto economics. So the idea of settlement assurances allows you to have property rights assurances. This goes back to the idea of property rights. The assurance is that your property is yours and is not going to be

• 1:10:57David Hoffman?

  taken from you because of settlement assurances. I've written an article about this. I gave a talk at Ethereum about this in 2019. And then we did an episode on this. This is episode five or episode seven of the Bankless Podcast. And so actually, I just went into the Discord just now and just wrote this answer out to Tadzu because I was so excited that they asked it, which is how you know that I didn't actually ask it myself. And I just dumped all that stuff in there into the Discord because it's such an important part of like how we think.

• 1:11:29Ryan Sean Adams?

  It really is. It really gets to the base layer of like why we're here and the entire thesis for crypto, I think. Like settlement assurances is really the economic weight that is cementing your particular transaction on chain, right?

• 1:11:45David Hoffman?

  Your property, your different property.

• 1:11:46Ryan Sean Adams?

  Yeah, it's all about economic weight. And what's interesting too is you can compare it across different chains, of course, but the comparison that you did with nation states and you say like a transaction is kind of settled by the court system, can be undone by the court system. There's even a layer under that, right? If your court system is functioning and democratic and there's a set of rules, yeah, that makes sense. What happens if your government becomes corrupt? What happens if you are a political dissident against an authoritarian government leadership? Well, not very difficult for them to unsettle your settled transaction. There's no finality, really. And so what are the settlement assurances of a nation state? It comes down to like Who's in power? Who's in control?

• 1:12:31David Hoffman?

  Who's got the guns?

• 1:12:32Ryan Sean Adams?

  Yeah, hopefully there's a constitution that kind of prohibits the people with guns from being able to do certain things and the society is governed that way. But what if that fractures? What if that decays? Cool thing about crypto is it's all kind of economic weight. We don't need to have guns. And so it provides a different, I might say better.

• 1:12:51David Hoffman?

  Yeah.

• 1:12:51Ryan Sean Adams?

  For the digital realm, it is a better settlement assurance. It's also worldwide, anyone with an internet system can access it. One of the books, I can't think of the name, name escapes me right now, but it's an economic book around the growth of economies. And it talks about how property rights are the best predictor, like the certainty and the stability of your property rights system is actually the predictor of a nation state's success. What did America get really right?

• 1:13:20David Hoffman?

  Hernando de Soto's Mysore Capital.

• 1:13:23Ryan Sean Adams?

  Yeah, that's it. What did America really get right in the early days? By the way, it took a long time for them to get here is property rights, settlement assurances and the property. And once they got that right, man, the economy was humming. People wanted to bring their businesses here. Entrepreneurs wanted to open up shop. People wanted to bring their capital to the country, the economic network with better settlement assurances. My God, I feel like we have another podcast in us, David.

• 1:13:47David Hoffman?

  Was it, wait, it was you that asked the question?

• 1:13:53Ryan Sean Adams?

  Ah, you caught me. There we go. We should go on to the next, but maybe we, maybe we need to dig deep in the archives and pull back some, some bankless content for kind of the new generation.

• 1:14:03David Hoffman?

  Yeah.

• 1:14:03Ryan Sean Adams?

  Yeah, bankless lore. Let's get to this next question from zero X Nader. This was not me asking the question. What are some of the biggest differences between this bear market in 2019? What would you say to that?

• 1:14:14David Hoffman?

  Yeah, so in 2018 or 19, we were creating DeFi for the very first time. In fact, we were coming up with a word for it and like Uniswap was created, Compound was created, Maker Dow was growing. The, that was what was going in, like it was a zero to one moment. It was like, we actually going into the last bear market, we really didn't know what Ethereum was good for. Like we had to defend smart contracts.

• 1:14:36Ryan Sean Adams?

  Just scam ICOs, that's all it was.

• 1:14:39David Hoffman?

  Just scam ICOs, yeah. And like, and we also had smart contracts that blew up, right? So like, we had to defend Ethereum, even though we had nothing to stand on as a foundation, we had just an idea to protect. That idea was correct because the next bull market happened was a DeFi bull market, DeFi summer, NFTs, blah, blah, blah, blah. So here we are in this bear market. What are we building now? Much more sophisticated financial infrastructure. Layer two bridges for reduced stuff. Layer two's and bridges. And then USCC is huge. The market cap of Ether is massive. I say, what is being built now? There's direction and purpose and we know what needs to get built. Like, the main difference in this bear market is we know what we're doing. Last time, we did not know what we're doing.

• 1:15:24David Hoffman?

  Investment in this ecosystem is much more directional and with intent and purpose, with a vision, with a north star, rather than just like wandering around in the dark. So in addition to that, we also have 10 to 100 times the amount of capital. Like, we almost ran out of money last time. And so, those are the main differences. The crypto is big. Gone are, like, the most frustrating thing about, and I picked up on this, I think, really early in my crypto career. There's like, oh, Bitcoin, Ether, it could go to zero. You could lose, you could lose everything that you put in. And people were saying that back in 2017 about Bitcoin. And I was like, it can't, it can't actually go to zero. That's the point. And we stopped saying that last bear market.

• 1:16:04Ryan Sean Adams?

  Or, or you could say, if you say that Bitcoin or Ether could go to zero, then you could also say that about any other asset on the planet.

• 1:16:12David Hoffman?

  Right, yes.

• 1:16:12Ryan Sean Adams?

  The dollar could go to zero.

• 1:16:14David Hoffman?

  Right.

• 1:16:14Ryan Sean Adams?

  Gold could go to zero.

• 1:16:15David Hoffman?

  Right.

• 1:16:16Ryan Sean Adams?

  Sure, it's all possible. We're just talking about probabilities here.

• 1:16:20David Hoffman?

  Right. And so, this bear market, like, no one's, no one's saying these words. And so, everyone now, and this is what it means to be priced in, right? Ether was $80 at the bottom, 80 to, like, $80 to $300, and now it's $1,000 to $2,000. No one's pricing in, like, going to zero anymore for Bitcoin and Ether. And that, that's producing much more stable foundation for people.

• 1:16:41Ryan Sean Adams?

  2018, 2018 was existential. We, I think of it as kind of a startup. Like, Bitcoin did have product market fit for some things, but Ethereum smart contract, DeFi, no, didn't have product market fit.

• 1:16:52David Hoffman?

  Dude, we were doing Twitter on the layer one. Could you imagine?

• 1:16:55Ryan Sean Adams?

  It was, it was a zero to one moment. It was existential. It's like, you were a company pre-product market fit. And that is... The hardest thing to do in an early-stage company, and most companies fail right there. Like, most companies die, most things die, most networks, most ideas die because they don't actually achieve product-market fit. Now, I have complete certainty that Ethereum's smart contracts have product-market fit. We've already done the zero-to-one. The only question is, how big is it gonna get? Now, we're just assessing what the total addressable market for this thing is.

• 1:17:28David Hoffman?

  Is it a 10x from here, or 100x from here? How many zeros we got left is the bigger question.

• 1:17:33Ryan Sean Adams?

  How many zeros we got left? How much of the, you know, like, the financial pie are these crypto networks going to be able to eat? I happen to think it's gonna be a lot of them. I happen to think it's gonna be kind of dominant. You know, I think we end with, I don't know, man, I haven't given out numbers in a long time, but we're gonna be tens of trillions of dollars in total crypto market cap. Remember at the intro, we say that every week? We're at 1 trillion right now.

• 1:17:57David Hoffman?

  Right.

• 1:17:58Ryan Sean Adams?

  30 to 50 trillion. I mean, that seems within sight to me. Now, where do you distribute that? There's a lot of questions. It's like, how much goes to ETH and Bitcoin? How much go to kind of the app layer? Don't know, have all the answers to that. But I do think that this entire new financial system will be denominated in the base money systems of their respective dominant blockchains. So, that's pretty bullish for assets like Ether. Anyway, totally different world in 2019. I wasn't sure if we were gonna make it. Now, it's just a waiting game. Well, we built. There we go. Got some takes of the week, David. Here is the first take. I don't know if you saw this. I'm just gonna play this for you. This is from Fred Wilson. You remember Fred? Yun Square Ventures?

• 1:18:40David Hoffman?

  Mm-hmm.

• 1:18:40Ryan Sean Adams?

  All right, this is what he says. The context here is, I think he was taken in front of some sort of government body. There's Barry Silbert in the picture here. And asking about crypto, and here's what he says.

• 1:18:51Speaker 02

  The lesson from the internet is, anything that China bans, invest in.

• 1:18:58Speaker 02

  And that's a joke, but the US allows Google to operate here, allows Twitter to operate here, allows Bitcoin to operate here, allows Facebook to operate here. Chinese government doesn't allow any of those companies to operate the way they operate in this country, or at all.

• 1:19:15Speaker 02

  It's about freedom, ultimately.

• 1:19:18Ryan Sean Adams?

  I just love that take. The lesson from the internet is anything that China bans, invest in. Of course, China has banned crypto in the past. I would broaden this, though, beyond China. Anything that the establishment is worried about or wants to ban, invest in that thing. This is part of a post where Fred Wilson recently responded in one of his quarterly calls at Unisquare Ventures, which is a VC fund that he operates. If they were going to respond to the regulatory pressure on Web3 by divesting, basically, cutting back their investments in Web3, and this is what he said, "When they want to shut it down, I say double

• 1:20:03Ryan Sean Adams?

  down." So to Fred Wilson, it is bullish that the authoritarians and the institutions that are threatened by this asset class want to shut it down. What do you think about that?

• 1:20:16David Hoffman?

  I love the line. Yeah. I mean, buy blood. It's the same thing as saying buy when there's blood in the streets. It's like, yeah, so like, we're getting choked out, starting to bleed. You should probably buy.

• 1:20:28Ryan Sean Adams?

  Choke me harder.

• 1:20:32David Hoffman?

  Ryan, I got a take for you. So this is something I learned this last week here at Zuzalu. Have you heard of the millennial pause?

• 1:20:42Ryan Sean Adams?

  I didn't know this was a thing until I saw this in the videos, but why don't you explain this?

• 1:20:47David Hoffman?

  Okay, so the millennial pause is like when you're on Instagram or TikTok and you're recording yourself because you're about to post a TikTok or a story or something. The millennial pause is this very brief moment, right when they hit the record button and they wait for it to start recording, and then they take a breath and say, "Hey, guys, it's me. I'm on this TikTok video, blah, blah, blah, blah." And then it's called the millennial pause because the Zoomers are also on TikTok, also on Instagram, because they're of age now, and they're like, "Why the fuck do you guys do that?"

• 1:21:16Ryan Sean Adams?

  Wait, wait. Can we see an example of this?

• 1:21:18David Hoffman?

  Yeah, okay. Open up the link. We got Taylor Swift doing the millennial pause. Okay, so it's very, very subtle and very, very brief, so you have to pay attention to the very, very first moments of this video.

• 1:21:28Ryan Sean Adams?

  And this is every time a millennial basically records themselves doing something.

• 1:21:32David Hoffman?

  Yeah, doing a selfie video, talking to the camera.

• 1:21:34Ryan Sean Adams?

  All right, here's Taylor Swift. Let me see if you can spot it.

• 1:21:40Ryan Sean Adams?

  It's that pause, right there.

• 1:21:41David Hoffman?

  It's just a hesitation.

• 1:21:42Ryan Sean Adams?

  Hey, guys.

• 1:21:43David Hoffman?

  When the video starts, they're not already talking. They're waiting for the video to start.

• 1:21:47Ryan Sean Adams?

  So when I first did that, when I first watched this, I was like, oh, yeah, that's how you do videos. Like, is there another way to do video? Apparently, there is. So what's the contrast with Gen Z?

• 1:21:58David Hoffman?

  So the Gen Z's got the Gen Z shake, which is the equivalent to the millennial pause. So what is the Gen Z shake? It's like when they hit record, they put their phone down and then continue to talk to the camera. Because it's like candid. And the important thing about this, why I thought this was cool, is that this comes from when millennials watched this camera and phone and internet technology arise and go from shit to good. When we hit record, previously, you would wait for the software to kick in for the recording to start.

• 1:22:29Ryan Sean Adams?

  There was a pause.

• 1:22:29David Hoffman?

  And you need to wait for it to happen. Now, with modern iPhones and Android phones, it's instantaneous, but we still wait.

• 1:22:37Ryan Sean Adams?

  Dude, we're getting old.

• 1:22:38David Hoffman?

  And so the zoomers are calling millennials boomers because of this millennial pause thing. We're waiting for our antiquated old technology to start recording. But okay, so the Gen Z shake is that they hit record and then they set their phone down and then they start talking. And so they're talking as they set the phone down, but the phone is shaking because they're setting it down. And so they're, and so like, they don't wait for, hey, guys. They don't wait for the breath. They don't say filler words. They just go right into the conversation. So they hit record and simultaneously start talking and saying, hey, you know when that thing happens, blah, blah, blah, blah, blah.

• 1:23:12Ryan Sean Adams?

  This is the difference. I think you have to see it. You'll have seen this if you've ever watched something, you know, on TikTok. Or, okay, so this is the Gen Z shake.

• 1:23:19David Hoffman?

  Right.

• 1:23:26Ryan Sean Adams?

  That was it. Do you see it?

• 1:23:27David Hoffman?

  Yeah, uh huh. I mean, that was very exaggerated. She's doing it on purpose, but yeah.

• 1:23:32Ryan Sean Adams?

  Yeah, that was.

• 1:23:33David Hoffman?

  I just think it's so cool how like both hardware and software that improves over time impacts the people that use it, right? I thought that was like a very fun phenomenon that like Zoomers are calling millennials like, yeah, you just did the millennial pause. And we're like, what do you mean the millennial pause? What am I doing?

• 1:23:51Ryan Sean Adams?

  I think it is so fascinating to see how, you know, technology impacts culture and behavior. Are you gonna stop doing the millennial pause? Or now you're just gonna notice it?

• 1:23:58David Hoffman?

  Do you think I'm the type of person to record selfies and post them to TikTok? Do you think I do this?

• 1:24:03Ryan Sean Adams?

  You guys should see the Bankless TikTok channel. It is nothing. There's nothing going on there because Dave and I suck at this.

• 1:24:09David Hoffman?

  All right, man.

• 1:24:10Ryan Sean Adams?

  Well, thank you for bringing that to our attention.

• 1:24:14David Hoffman?

  Now, now I know.

• 1:24:15Ryan Sean Adams?

  Tell me, what are you bullish on this week?

• 1:24:17David Hoffman?

  Okay, so I was on the Solana podcast.

• 1:24:20Ryan Sean Adams?

  What?

• 1:24:21David Hoffman?

  Right? Yeah, so it's called the Validated Podcast, hosted by Austin Federer. I've actually hung out with him a couple of times in real life. So we talked about like the differences between Ethereum and Solana. And so I thought that was, it was a really cool and enjoyable podcast.

• 1:24:35Ryan Sean Adams?

  What were the takeaways?

• 1:24:36David Hoffman?

  I made a big like call to action. I like talked about how Bankless came to be, is a lot of it is about Bankless, right? And how like we are kind of the voice of Ethereum. And I was like, yeah, so like the Solana people, the Solana community came into the world of crypto in 2021. They didn't go through the same like upbringing that the Ethereum people had in the last bear market where we were just harassed by Bitcoiners and we had to prove our legitimacy and prove why we're here.

• 1:25:03Ryan Sean Adams?

  It's a generational difference?

• 1:25:04David Hoffman?

  It's a generational difference. And they, so like they skipped that in my mind. And so they skipped over the idea of settlement assurances, which Ethereum and Bitcoiners are aligned by. They skipped over the conversations of like, what makes a full node? And why do you need to have a full node that's easy to manage and easy to run? We skipped, they skipped the conversation of what is money? And so like, they're coming in and then like the Ethereum people are like, hey, like, don't use centralized trains. You pay the gas fees and you'll like it. And like, understanding that's not like a way to onboard new users. We just, we just went back and forth on like the philosophical differences and like the upbringings of these communities. I thought it was a really good podcast. It's actually going to come out on the Bankless RSS feed soon, TM, maybe this weekend. And so it will be in your inbox player as well.

• 1:25:48David Hoffman?

  I asked Austin if we could release it here on Bankless. And so he said yes and sent me the file. So that'll come soon to this podcast player.

• 1:25:54Ryan Sean Adams?

  I think one thing that I think is true that I'm not sure a lot of people agree with, but I think it's true anyway, is I believe very much that Solana is good for Ethereum. I think Solana, the Solana community would probably say Ethereum is good for Solana. You know, it sort of came first.

• 1:26:10David Hoffman?

  Bitcoiners say Ethereum is good for Bitcoin, blah, blah, blah.

• 1:26:12Ryan Sean Adams?

  But I actually think Solana is good for Ethereum. It's really kept Ethereum on its toes from a user experience perspective, right? Even like developing while it's like Phantom, which are now coming back to, coming to Ethereum, right? But this, the prioritization of user onboarding, I mean, Ethereum hasn't had that. It's, it's been a little bit of what you've said of like, you will pay high gas fees and you'll like it and you'll, you'll deal with our like shitty UX and you'll like it. And Solana is a bit more like, hey, like we need to onboard people quickly. And Ethereum, sometimes Ethereum will be like, but you're cutting corners, right? And, but I think there's probably a healthy balance of how can you improve your UX without

• 1:26:57Ryan Sean Adams?

  cutting those corners? Anyway, I just think that community has made Ethereum sharper as well. I don't know if everyone agrees with that, but there's a take. That's what we do on Bankless. Takes all the time.

• 1:27:08David Hoffman?

  All right, Ryan, what do you, what do you bullish on?

• 1:27:10Ryan Sean Adams?

  I'm bullish on this. This is a tweet from Ryan Berkman's on tokenized treasuries. I didn't know this before I actually read this tweet. Here's a fact sheet. Total value locked from $0 to $200 million in three and a half months. Half a dozen good competitors. The yield on tokenized treasuries, the future of tokenized treasuries right now, because interest rates so, are so high, 4.75%. You can see this in a Dune Analytics dashboard, but the idea, David, of tokenized T-bills actually gets me kind of excited. And I'm not the type to be excited by like on-chain real-world assets, but like, we don't find this type of, of yields in DeFi these days.

• 1:27:55Ryan Sean Adams?

  4.75%. So I think if we can onboard more T-bills on-chain to Ethereum, this

• 1:28:04Ryan Sean Adams?

  This is an area of growth for us. I mean, the amount of real world assets that we have on chain is pretty low. And T bills are like pretty simple. They should be very simple to actually deploy and put on chain. And even the idea of this, this is in Ryan's tweet here. Personally, I hope we'll see a tokenized T bill with whitelist minting, permissionless trading, secondary one unit equals $1 with rebasing yield. This would be a USDC competitor that passes its yield on to customers, whereas USDC has 100% take rate. So imagine there was a version of USDC in quotes that was instead of dollars, tokenized T bills.

• 1:28:44Ryan Sean Adams?

  Gives you that additional 4.75% juice. You actually can't access that as a fungible token in the real world, can you? You can't like go spend T bills at a store. You have to have dollars, but you should be able to, shouldn't you? And a tokenized T bill would make that happen. So I didn't expect to like be bullish this week on real world assets, let alone T bills. But I'm kind of weirdly bullish on the marrying of the two things. And that is why.

• 1:29:17David Hoffman?

  I mean, crypto people love their yield, right? So it makes sense. And all capital wants to converge. And so capital will find its way naturally to Ethereum as the epicenter, the logical conclusion of where capital will go. Makes sense to me.

• 1:29:30Ryan Sean Adams?

  Have I made you bullish on it?

• 1:29:32David Hoffman?

  I'm always bullish on real world assets.

• 1:29:35Ryan Sean Adams?

  Never not bullish on that.

• 1:29:35David Hoffman?

  I was always bullish on real world assets.

• 1:29:37Ryan Sean Adams?

  Meme of the week, what do we got?

• 1:29:38David Hoffman?

  Before it was cool. So it was EdCon this last week. It is the Ethereum like educational convention conference. And last year, so in this photo, this is how it started, how it's going kind of meme. This is an Instagram account of this man named Mickey, who is probably going to be the prime minister of Montenegro. Elections are in two weeks. Last year, Vitalik a Montenegrin passport. And this year at EdCon, he also got this like traditional Montenegrin like garb.

• 1:30:12David Hoffman?

  I'm not even going to be able to try and explain this for the podcast listeners, but the guy is looking, how would you even describe that?

• 1:30:18Ryan Sean Adams?

  I don't know. Without misplacing my cultures here, I actually don't know what this looks like.

• 1:30:24David Hoffman?

  Yeah. Anyways, so Mickey, this is actually a story about Mickey, the incoming potential Prime Minister of Montenegro. I don't have time to explain it in this one meme because this is just the meme of the week, but it's bullish.

• 1:30:38Ryan Sean Adams?

  He's bullish crypto.

• 1:30:39David Hoffman?

  It's bullish crypto and making Montenegro like natively a crypto country. So kind of like El Salvador, like official Bitcoin is like the official currency of El Salvador. That, except it makes sense in Montenegro. Let me say that again. Kind of like that, but with plans that actually make sense.

• 1:31:01Ryan Sean Adams?

  Yeah. Well, that would be bullish if we could get something like that. Very good. Well, guys, thank you for being with us on the roll up again this week. Risks and disclaimers, of course, none of this has been financial advice. What do we say every week? Crypto is risky. So is Bitcoin. So is Ether. So is DeFi. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.