ROLLUP: World War Threat | North Korean Hackers | Vitalik Roadmap Updates | Visa Platform On Ethereum

In this episode, we discuss escalating global tensions and their impact on crypto markets, questioning whether Bitcoin is a risk-on or risk-off asset in times of instability. We cover legal developments around Tornado Cash, the potential for an XRP ETF amid SEC scrutiny, and Visa’s new fiat tokenization platform on Ethereum. Plus, don’t miss details on the upcoming Kain vs. David fight at Permissionless! ------ 📣 0x v2 | NEXT GEN PRICING ENGINE https://bankless.cc/0x ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum https://%E2%81%A0https//bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/73?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E ------ TIMESTAMPS & Resources 00:00 War And Crypto https://x.com/PeterKwoba2/status/1841177421179183405 https://x.com/lexfridman/status/1841253627190517785 https://www.coindesk.com/markets/2024/10/02/bitcoin-regains-61k-in-worst-start-to-most-bullish-month-as-israel-iran-tensions-rage-on/ https://x.com/legendarygainz_/status/1840733999930413127 https://x.com/VitalikButerin/status/1840944416997195974 08:49 Markets https://pro.kraken.com/app/trade/btc-usd https://farside.co.uk/btc/ https://x.com/NateGeraci/status/1840036803404800018 https://www.coingecko.com/en/global-charts 12:26 L2 Update https://l2beat.com/scaling/summary https://www.growthepie.xyz/chains/ethereum https://www.coingecko.com/ 17:57 Rate Cuts https://x.com/Cointelegraph/status/1840819209879896455 22:58 Tornado Cash Updates https://x.com/BanklessHQ/status/1839408070524547246 https://www.theblock.co/post/318417/tornado-cash-founder-roman-storm-to-face-trial https://x.com/jchervinsky/status/1839478184808460325 https://juicebox.money/@defend-roman-storm 32:21 Ripple ETF? https://x.com/BitwiseInvest/status/1841464422557954168 https://x.com/NateGeraci/status/18412784213655720187 https://x.com/EleanorTerrett/status/1841586154258285021 35:10 SEC Director Updates https://x.com/SECGov/status/1841548406029754524 https://x.com/GOPMajorityWhip/status/1841560880955158916 https://x.com/jchervinsky/status/1841572472195305651 38:57 Visa Launch On Ethereum https://blockworks.co/news/visa-to-help-banks-test-tokenized-assets-smart-contracts 40:30 Vitalik On Alignment https://vitalik.eth.limo/general/2024/09/28/alignment.html https://x.com/RyanSAdams/status/1840026201999495332 43:08 Pectra Upgrade https://www.youtube.com/live/PWhn8KdgCl8?si=2dyOikXU9ja7lbji&t=2762 https://www.youtube.com/live/PWhn8KdgCl8?si=2dyOikXU9ja7lbji&t=2762 https://github.com/ethereum/pm/issues/1153#issuecomment-2377002932 47:32 Coinbase's New Exec https://x.com/jessepollak/status/1840929040854892966?s=46 48:14 Polymarket https://x.com/shayne_coplan/status/1840033666723938669?s=46 49:01 The gm Heard Round The World https://x.com/cz_binance/status/1839861237850497271?s=46 49:26 North Korea https://x.com/skesslr/status/1841421864779833494 54:35 Fight Prep https://x.com/TrustlessState/status/1841094626108748128 https://x.com/kaiynne/status/1841642359378829411 https://polymarket.com/event/hoffman-vs-warwick?tid=1727184262347 If you don’t have your tickets yet, Bankless has something for you! Bankless listeners - 10% off tickets with BANKLESS10 Bankless citizens - 30% off tickets with the link in the shownotes https://bankless.cc/PermissionlessDiscount If you do have tickets and you are a Bankless citizen, don’t forget to sign up for the Bankless Meetup! https://lu.ma/yj5pdeqe ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ryan Sean Adams?

  It's actually crazy just like watching the missiles rain down on Israel.

• 0:08David Hoffman?

  Yeah, so what you're hearing is the sirens in Israel as Iran launched 200 ballistic missiles, some getting through the Iron Dome into Israel, and globally markets just got really scared.

• 0:21Ryan Sean Adams?

  Oh yeah, this is this is peak global uncertainty, I think, at least on this year. And I think we should say, obviously, before we get into this roll up, just a sentiment check. This is like, not, this is bad news for everybody, for the entire world, right? And I think Lex Friedman put it well when he said, "Probability if World War III feels higher than ever, a global war would destroy humanity." I pray for the wisdom of our leaders. I think, you know, we also echo that sentiment. This is kind of a concerning time that we're in, for sure.

• 0:52David Hoffman?

  I think all eyes are kind of pointed at the Middle East right now, not really knowing what happens next, but neither side, either the anti-Israel, pro-Israel side, really seems to be interested in taking the foot off the gas at the present moment.

• 1:07Ryan Sean Adams?

  Yeah, I mean, hopefully this doesn't escalate into something wider. And of course, all of this global instability affects markets, including crypto markets, and that's been a theme of the week. This has been the worst start to October, as these tensions have raged on. And it calls into question, I think, what we've talked about. Remember that BlackRock report, where they were talking about Bitcoin as actually sort of a, an asset when there's global uncertainty? Like, it should appreciate the way gold does in global uncertainty? It kind of wasn't in the aftermath of this, which is kind of interesting. Last night's, so this is published the day after these attacks, last night's Bitcoin price action, Bitcoin was negative 4, while gold was up almost 1% in the aftermath of

• 1:51Ryan Sean Adams?

  the Iranian attack. And this is kind of puzzling, when you try to think about Bitcoin being sort of a global instability type of hedge.

• 2:00David Hoffman?

  This is what BlackRock was talking about as their frame of understanding around Bitcoin. Now, there could be a difference of timeframes here. Bitcoin could just like go risk off in the very short term, while global instability over the long term might actually benefit Bitcoin. That is still possible. Also, since we're talking about this, there was this tweet that went out with this new Polymarket front page, where it's talking about all these different markets that are related to this crisis in the Middle East. "Will Israeli forces enter Lebanon in September? 86% chance." "Will Iran strike on Israel before November? Will the US evacuate their Beirut embassy before October?" And the tweet on this, the screenshot of Polymarket, says,

• 2:43David Hoffman?

  "It feels wrong that Polymarket has an entire Hezbollah betting section that makes war look like a football game to bet on," which actually caught Vitalik's attention, who went and responded, "I'm actually in support of these. I support these existing. The point of Polymarket is that the perspective of traders, it's a betting site. But from the perspective of viewers, it's a news site. There's all kinds of people, including elites on Twitter, and the internet making harmful and inaccurate predictions about conflicts. And being able to go and see if people with actual skin in the game think that there is something that has a 2% chance or a 50% chance is a valuable feature that can help keep people sane." So, just, it's interesting to see crypto respond to global current events in an increasingly high-fidelity fashion.

• 3:26Ryan Sean Adams?

  Yeah, it's like war betting does seem crazy. And like viscerally, when you look at this and you're like these charts, I guess viscerally, my first reaction is like, is this like a war betting market? And that seems like, it does seem wrong. So I share the original like posters visceral reaction. And yet, I also agree with Vitalik that when you look at the probability of all of these things, is there a better source of accurate information around this? Like, in a world where I have no idea what's going on and the risks of various escalations and attacks, this is a fantastic source of information for that. So I share that from Vitalik as well. I just kind of wonder what the rest of the world thinks.

• 4:10Ryan Sean Adams?

  Thinks about all of this in crypto. And I do think this brings up a broader question in crypto. It's just like, I think sometimes the outside world looks at crypto and they're like, oh yeah, you guys are betting on like bunkers.

• 4:23David Hoffman?

  Hyper financialization.

• 4:24Ryan Sean Adams?

  Yeah, you guys are betting on doomsday scenario and like you're hopeful that fiat inflates to infinity so that you can go hide in your bunker and have Bitcoin. And that's like a very antisocial type of like take, right? But it's interesting with Bitcoin and more so with Ethereum. I think it's kind of juxtaposed from like, it's not a pessimistic technology, but it kind of is. And also it's not purely an optimistic technology, but it also kind of is. It's almost like this cynically optimistic technology because the entire Bitcoin and even Ethereum project is basically cynical from the perspective of, hey, we can't put all of our trust in centralized institutions.

• 5:09Ryan Sean Adams?

  And if we don't have balance of power decentralizations, they will increase in their level of corruption. Right? So it's cynical from that perspective, but it's also optimistic from the perspective of it's building an alternative and it's building a new set of tools that people can use that fosters trust. So it's just this weird juxtaposition I find myself in being an Ethereum and Bitcoin bull.

• 5:35David Hoffman?

  I think for whatever take there is out there of, oh, these crypto people are just betting on World War III. They're betting on the destruction of the earth and that's just like what they're doing, what their culture is. It seems to be pretty adjacent to people that say crypto has no use case. And it's because crypto has no use case for them, but go talk to somebody in a developing nation that has escaped their hyper inflating currency using stable coins. And now like there is information here, like $2 million on will Israel invade Lebanon before November? 86%, 80% chance. That has now been able to inform people's actions and choices about their lives as it relates to them. And this of course is just the Hezbollah section of polymarket. There's other sections of polymarket that now people can have information.

• 6:20David Hoffman?

  Good, quality, unbiased, market-based information about how to make choices about their lives, aside from the fact that other people are betting on these outcomes.

• 6:31Ryan Sean Adams?

  Yeah, agreed. David, we got so much more to talk about. It's not just war stuff today. Roman Storm of Tornado Cash had his motion to dismiss. He had filed a motion to dismiss his court case. It was rejected this week. And David, there are massive implications for this I want to talk to you about. The judge made a ruling that might actually imply all DeFi operating in the United States is illegal? A money transmitter? We've got to discuss that.

• 6:57David Hoffman?

  Ripple might be getting an ETF if Bitwise has its way, but the SEC says not so fast and wants to go back to the drawing board about the XRP versus SEC case about Ripple being a security. Wow, going all the way back there. And then also Visa debuts a fiat tokenization platform on Ethereum with banks as its biggest customer.

• 7:21Ryan Sean Adams?

  Powell's predicting a couple more rate cuts. We'll discuss that. Also, North Korean hackers are invading crypto companies like en masse. This is a wild story we've got to get into. And Bankless listeners, stay tuned to the end because I got some alpha on the Kane versus David fight. At least I hope I do.

• 7:35David Hoffman?

  You do?

• 7:36Ryan Sean Adams?

  And that's happening next week. I hope you do. Anyway, David, you gotta fill in.

• 7:39David Hoffman?

  Did I give you this alpha or do you have this alpha?

• 7:41Ryan Sean Adams?

  It's a mix between your alpha and my alpha combined.

• 7:46David Hoffman?

  Wait, you have alpha that you haven't given me?

• 7:49Ryan Sean Adams?

  I don't know. Wait till the end and you'll hear all that. It's happening October 11th and there's going to be a special offer for everyone trying to get last-minute tickets to that fight and to permissionless. So stay tuned.

• 8:00David Hoffman?

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• 8:45Ryan Sean Adams?

  This one's for the devs, right? It's an API around this.

• 8:47David Hoffman?

  Yeah, yeah, yeah, exactly.

• 8:49Ryan Sean Adams?

  All right, let's get to the prices on the week, David. I want to look at these charts in some detail. Thanks to Kraken for providing these charts. All right, where are we on the week? And where was the missile dip that we saw earlier in the week?

• 9:01David Hoffman?

  Turns out crypto prices are inversely correlated to the number of missiles launched in the world. Bitcoin currently clocking in at $60,300. Dipped below $60,000, but got back above $60,000 pretty quickly there.

• 9:13Ryan Sean Adams?

  So you said, do you say down 7% on the week?

• 9:15David Hoffman?

  Down 7%, that's right.

• 9:16Ryan Sean Adams?

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

• 9:17David Hoffman?

  That's a lot, that's a lot for Bitcoin.

• 9:18Ryan Sean Adams?

  How about Ether?

• 9:19David Hoffman?

  Ether, down 11% on the week. Started the week at $2,640, currently at $2,315. I think that actually means it's more like down 12% because it's dipped lower than when I put these numbers in.

• 9:30Ryan Sean Adams?

  Okay, so what does that tell us? Does that tell us that like global instability is even worse for Ether relative to Bitcoin?

• 9:37David Hoffman?

  Yeah, Ether's always been like the more optimistic, optimistic token of the two. And it always just moves more than Bitcoin, that's right. Let's go and check on the ETF flows, starting with Bitcoin. Where are we at on the Bitcoin ETF flows? It has been some big weeks up last week, but in the last two days, $242 million out of the Bitcoin ETF on the first, $64 million out of the Bitcoin ETFs on the second. At some point, these are just going to be called equilibrium. Last week was a huge week. There was like almost a billion dollars of inflows into Bitcoin ETFs alone. So I mean, it's not bleeding that much.

• 10:14Ryan Sean Adams?

  I mean, October 1st was kind of the Tuesday that the missile strikes took place, right? So it makes sense you'd see a drainage as you see.

• 10:22David Hoffman?

  Is that the first day that there's outflows from the BlackRock in a Bitcoin ETF? Wow, I think it might be.

• 10:26Ryan Sean Adams?

  Oh, wow. Well, the first day in a while, right?

• 10:30David Hoffman?

  No, I think that might be the first day ever.

• 10:31Ryan Sean Adams?

  Ever? I mean, this chart, I don't know, this chart only goes back like 15 days here.

• 10:35David Hoffman?

  Yeah, I don't think, I think that's the first day ever that Bitcoin has had outflows.

• 10:38Ryan Sean Adams?

  You actually think that's the first day ever that BlackRock has had outflows?

• 10:42David Hoffman?

  Yeah, it's always been inflows. Yeah. That's the first red number there. I'm pretty sure that's true.

• 10:46Ryan Sean Adams?

  Someone fact-checked that. I don't know about that.

• 10:48David Hoffman?

  You want to place a bet?

• 10:49Ryan Sean Adams?

  How about Ether? No, I've done, all my money's going on that Kane versus David bet, okay? All my betting money.

• 10:55David Hoffman?

  On which side?

• 10:57Ryan Sean Adams?

  Well, we'll have to waste the end to find out, David.

• 11:00David Hoffman?

  Ether outflows similar to Bitcoin $48 million on the first. Actually, had $20 million of inflows on the second. So it wasn't, the inflows weren't too rattled, I would say, by the Middle East conflict.

• 11:10Ryan Sean Adams?

  Okay. There was a milestone that was passed, which is nice, though. This is a pretty big milestone. So the iShares, that's a BlackRock Ethereum ETF, just eclipsed $1 billion in total assets. So assets under management of above $1 billion. So it's now in the top 20% of all of the ETFs of all time, and it did it in two months. So it feels like, that feels like a big deal, but also, it still feels like, I don't know, Ethereum's a little brother syndrome of like Bitcoin already smashed all of these records. So now I look at this and I'm like, oh, cool. Like, you know, the second place trophy doesn't seem that great in comparison.

• 11:48David Hoffman?

  The second place trophy going to the little brother that's five years younger.

• 11:51Ryan Sean Adams?

  Yeah. Well, especially when you meld it with this, David, this is the ETH Bitcoin ratio, and we're under 0.4 again. What are we on the week?

• 12:00David Hoffman?

  0.0385. So that's been as low as it has been. It got this low on the 19th of September. It's back there again.

• 12:09Ryan Sean Adams?

  It's bottoming?

• 12:10David Hoffman?

  Yeah, we're, bottoming. Bottoming can continue. It can continue to bottom.

• 12:15Ryan Sean Adams?

  Yeah, you know, continue to bottom. And how about total crypto market cap? Are we, we're still above a trillion?

• 12:21David Hoffman?

  2.2 trillion on the week. Yeah, still healthily above a 2 trillion.

• 12:25Ryan Sean Adams?

  Well, speaking of health, one thing that is healthy in the Ethereum economy is the Layer 2 economies. And thanks to Mantle for this Layer 2 update. This is what caught my eye this week. So this is a new set of dashboards created by the Grow the Pi analytics team, which is just like, you know, crushing it. They call these economics dashboards. And here's what I kind of picked out. This is, if you sort this on the one year, and you look at L2 profitability, you can see, David, a number of very highly profitable Layer 2s that have built on Ethereum. So nine chains in total.

• 12:59David Hoffman?

  We actually have to define what profit is. Because some people reject the term profit in the term of chain terms. What do you mean by profitability in? The context of a blockchain.

• 13:08Ryan Sean Adams?

  Yeah, so the revenue that a layer two in particular makes is the sum of fees that were paid by users of the chain. So if you use base, if you use Arbitrum, if you use Optimism, Scroll, etc., right? As a user, you're paying some fee, okay? So that's the revenue that they make. And the cost in this context is kind of like a gross profit metric. So the cost in this context is the fees that they have to pay the layer one. That is Ethereum in order to settle and provide a data availability for this service. So this is why our analog has been Ethereum, like layer twos are essentially reselling Ethereum block space to the market. And they're reselling that on a profit margin. So the delta is gross profit margin, essentially.

• 13:51Ryan Sean Adams?

  Revenue, less, less costs is your gross, gross profit margin. The story here is there's now nine chains in total that are very much in the green. Hundred and fifty million dollars they've made in gross profit over the last 12 months. It's really cool to see this economy of chains. Like here was kind of my, my, my bull take on it, David, in a tweet summary. Ethereum has already produced nine chains with gross profit. Each chain is an economy. Ethereum is a federated union of economies with ETH as its money. I think this is very bullish ETH, even if the market's not reflecting it at this point in time.

• 14:26David Hoffman?

  For some reason, people really just don't like this profit word. And maybe you can argue with the semantics, maybe you can argue with the idea of profit.

• 14:34Ryan Sean Adams?

  Who doesn't like it?

• 14:35David Hoffman?

  But what you cannot argue with is that fifty million dollars of ETH over the last year ended up in base's treasury, which is Coinbase, or Arbitrum. Twenty-two point three million dollars of ETH went to the Arbitrum treasury. I don't know what you want to call that, but there's twenty-two million dollars of ETH there. Revenue from base over the last year, sixty-four million. Costs of base, fourteen million. That's not a lot of costs in comparison to the revenue. Arbitrum, fifty-eight million dollars of revenue, thirty-five million dollars of costs. And these are the, the nine chains that are profitable, the nine layer twos that are profitable, are nine out of the 10 chains that are profitable, the 10th being Tron. Tron is the only, other than the Ethereum Layer 1.

• 15:19Ryan Sean Adams?

  Are you talking about of all the chains, not just?

• 15:20David Hoffman?

  Of all the chains.

• 15:21Ryan Sean Adams?

  Yeah.

• 15:21David Hoffman?

  All the chains that exist in crypto. The ones that are profitable are the Ethereum Layer 1, these nine specific Layer 2s, and Tron.

• 15:29Ryan Sean Adams?

  And that's because you're adding another element here, which is you're considering issuance of these Layer 1 chains as cost, right? So for...

• 15:37David Hoffman?

  Which some people also debate, that issuance is a cost, which is ridiculous.

• 15:41Ryan Sean Adams?

  Layer 2s do not have additional inflation or additional issuance.

• 15:45David Hoffman?

  They do not have to have. They can issue if they choose to, but it's not forced upon them for security, because Ethereum pays for their security.

• 15:51Ryan Sean Adams?

  Yeah, and I mean, the reason I say a federated unit of economies with Ethereum's money is because there's another dimension here that the economics charts and go the pie don't show, which I think is really important, is there is a massive amount of Ether being used as economic bandwidth and money on, say, for instance, Base. You know, there's almost 600,000 Ether? It's like $1.3 billion of Ethas money on Base. Equivalent amount, even more, on Arbitrum. And so that is the Ethas money use case. But I will say, David, there's another way to interpret this data set. So I got some pushback from some of the "Make the L1 great again" type folks, like Bread, who's got some great analysis on Twitter. And what he sees is a different lens on this. So what he sees is the profit margin percent.

• 16:34Ryan Sean Adams?

  And basically, he's saying that, like, yeah, L2 chains are in the green, they're making profit, but almost at the expense of the L1. So their profit margins are like 95%.

• 16:45David Hoffman?

  I think that's an accurate take. It is at the expense of the Layer 1 P&L sheet.

• 16:52Ryan Sean Adams?

  Yeah.

• 16:52David Hoffman?

  That is true.

• 16:53Ryan Sean Adams?

  It is, in a way, because, so these Layer 2s are making 95% profit, and only for every $1 that they make, they're getting 95 cents of that, and they're only paying 5% back to the ETH L1 in terms of, yeah, DA and settlement costs.

• 17:08David Hoffman?

  That is the roll-up-centric roadmap, that's what that is.

• 17:11Ryan Sean Adams?

  Yeah, but you could interpret that, and you could say, well, ETH is not being burnt anymore, it's not returning cash flows to ETH holders, and therefore it's actually bearish ETH.

• 17:20David Hoffman?

  I don't know if it's bearish ETH, it's bearish, it's bearish if you only value ETH on the P and L.

• 17:25Ryan Sean Adams?

  Yeah, I am back to, and we should have a longer discussion and podcast about all of this, like kind of like our findings and takes.

• 17:32David Hoffman?

  By the fact that we're talking about it for so long.

• 17:34Ryan Sean Adams?

  Yeah, for sure, but like back to ETH, this is fantastic for ETH being money. And that is the only thing that matters in the L1 game. I'm coming back to like the, um, L1 tokens are money. Like, that's all that they do. Everything else will be like app layer take fees and you're not going to be able to preserve that. Anyway, longer discussion. Should we talk about Powell for a minute?

• 17:57David Hoffman?

  Yeah, Powell says there could be two additional rate cuts this year, but don't get too excited because he says, not that fast. Not that fast. Uh, he said, the recent 50 bips of interest rate cuts should not be interpreted as a sign that future moves will be so aggressive. He says, this is not a committee that feels like it is in a hurry to cut rates quickly. If the economy performs as expected, this would be two more rate cuts this year, a total of 50 basis points more. So we would get 1% in the year 2024 this year. We are not getting, we are not, we do not have like ammo loaded up with 50 bips each. We're just getting perhaps, if good things go according to plan, just 50% more total this year.

• 18:39Ryan Sean Adams?

  Kind of expected.

• 18:40David Hoffman?

  Which is fine.

• 18:40Ryan Sean Adams?

  Kind of expected, right?

• 18:41David Hoffman?

  Yeah.

• 18:42Ryan Sean Adams?

  Yeah, I think the things to monitor, uh, as always, as you now, you know, post pivot are the jobs reports, the Fed balance sheet, Fed deficits, all of these things will contribute to, uh, the, the global liquidity and therefore the demand of commodity crypto money assets.

• 18:57David Hoffman?

  And also jobs reports coming in looking good.

• 19:00Ryan Sean Adams?

  So far, yeah, so far so good.

• 19:02David Hoffman?

  Job openings are up and joblessness claims are up.

• 19:06Ryan Sean Adams?

  Although have you seen, uh, David, this longshoreman stuff? So, um,

• 19:10David Hoffman?

  Oh, I have not.

• 19:10Ryan Sean Adams?

  Our Costco shelves, I can't find toilet paper anymore. There's been like another run on the shelves. It's like, that's happened locally where I live and it's happening all.

• 19:18David Hoffman?

  You ran out of toilet paper?

• 19:19Ryan Sean Adams?

  Yeah, it's because of people.

• 19:20David Hoffman?

  You ran out of toilet paper?

• 19:20Ryan Sean Adams?

  No, I have toilet paper, okay? Cause like we maintain a stock, all right? I'm not crazy. I'm a prepper, you know this. I'm a crypto guy. Of course I'd have toilet paper. Are you crazy? Uh, but yeah, that, so that's another, you know, kind of thing this week that I don't know if you caught, but I mean, that could.

• 19:35David Hoffman?

  Wait, do I need to go get toilet paper?

• 19:38Ryan Sean Adams?

  David is not a prepper. No, dude, I got it for both of us. I'll send you some if you need it.

• 19:44David Hoffman?

  What do we got coming up? Coming up next, why was the free speech argument rejected in the tornado cash court case? And what does it apply for the rest of the industry? I think Ryan's got a little story to tell. I do. And then my story for you guys is Bitwise filing for the XRP ETF, but the SEC is filing for an appeal at this Ripple case, the case that actually decided that crypto assets are not in of themselves securities, that a securities transaction could happen, but that securities transaction does not create a security of the asset. So we're going to talk about this and more, but first a moment to talk about some of these fantastic sponsors that make this show possible, especially Kraken, our preferred place for buying crypto in 2024. If you do not have an account with Kraken, buy now. Consider clicking the link in the show notes, getting started with Kraken today. If you want a crypto trading experience backed by world-class security and award-winning

• 20:29David Hoffman?

  support teams, then head over to Kraken, one of the longest-standing and most secure crypto platforms in the world. Kraken is on a journey to build a more accessible, inclusive, and fair financial system, making it simple and secure for everyone, everywhere, to trade crypto. Kraken's intuitive trading tools are designed to grow with you, empowering you to make your first or your 100th trade in just a few clicks. And there's an award-winning client support team available 24/7 to help you along the way, along with a whole range of educational guides, articles, and videos. With products and features like Kraken Pro and Kraken NFT Marketplace and a seamless app to bring it all together, it's really the perfect place to get your complete crypto experience. So check out the simple, secure, and powerful way for everyone to trade crypto, whether you're a complete beginner or a seasoned pro.

• 21:12David Hoffman?

  Go to kraken.com/banklist to see what crypto can be. Not investment advice, crypto trading involves risk of loss. Uniswap Wallet is officially the preferred wallet of bankless, and it's the one we use anytime when we want to transact on-chain. Whether you're on your browser or on the go, Uniswap Wallet makes it easier than ever to swap anytime, anywhere. Use your wallet to transfer funds directly from a top centralized exchange and tap into thousands of tokens across the Ethereum and over 10 other chains like Base, Arbitrum, and Optimism. Uniswap Wallet delivers deep liquidity, fast execution, and reliable quotes with zero gas swaps through Uniswap X. And when it comes to security, you can rest easy knowing it's backed by Uniswap Labs, one of the most trusted teams in DeFi. Their code is open source and independently reviewed, so you know it's protected. So why wait? Download the Uniswap Wallet today on Chrome, iOS, and Android.

• 21:55David Hoffman?

  And don't forget to claim your free uni.eith username directly in the mobile wallet. Start swapping smarter with Uniswap. Have you ever felt that the tools for developing decentralized applications are too restrictive and fail to leverage advancements from traditional software programming? There's a wide range of expressive building blocks beyond conventional smart contracts and solidity development. Don't waste your time building the basics from scratch and don't limit the potential of your vision. Cartesi provides powerful and scalable solutions for developers that supercharge app development. With a Cartesi virtual machine, you can run a full Linux OS and access decades of rich code libraries and open source tooling for building in Web3. And with Cartesi's unique rollup framework, you'll get real-world scaling and computation. No more competing for block space. So if you're a developer looking to push the boundaries of what's possible in Web3,

• 22:40David Hoffman?

  Cartesi is now offering up to $50,000 in grants. Head over to Cartesi's grant application page to apply today. And if you're not a developer, those with staked CTSI can take part in the governance process and vote on whether or not a proposal should be funded. Make sure you're vote-ready by staking your CTSI before the votes open. Roman Storm, the Tornado Cash developer, had a motion to dismiss his own case. That motion was rejected. The ruling by the judge calls into question whether DeFi United States is actually currently operating illegally. Whoa, whoa, whoa, whoa, okay.

• 23:12Ryan Sean Adams?

  That's the crazy part, dude.

• 23:13David Hoffman?

  My understanding was that the Roman Storm case determines whether or not the United States can make a smart contract illegal. If Roman Storm goes to jail, it's because the ruling is yes, smart contracts can be illegal. If we prevent him from going to jail, it's because the ruling is no, United States, smart contracts are just technology, they're just software, you can't make them illegal, you can't violate the free speech. That's what I thought was going on. Is that what's not what's going on?

• 23:39Ryan Sean Adams?

  That's all true, and it's also more. I want to get to why this ruling is potentially incredibly concerning to me and to some of the crypto lawyers that I've talked to, sort of behind the scenes. One crypto lawyer told me off the record that they're struggling to figure out how literally anyone who's launched a DeFi protocol is not also committing a crime right now as a result of this ruling, David. Not the future, full case. For Roman Storm, that happens December 2nd, but this ruling. So let's talk about what actually happened with this. So Judge Fileia rejected Roman Storm's motion to dismiss in a New York court and ruled that the case could proceed to trial. So there was a motion to dismiss that was rejected, but then she also made a ruling.

• 24:23Ryan Sean Adams?

  And she made this ruling verbally, which is somewhat interesting. Basically, the court ruled that using computer code to further alleged money laundering is not a First Amendment protected activity. Okay, so the ruling says code is not speech. And she ruled that there was no custody requirement in the legislation definition of a money transmitter. And this is really important. This is the second part I was talking about. Implicitly threatening the entire industry with additional requirements. Okay, so code is not speech. Like, we kind of anticipated that could be some judge's ruling, right? That was a possibility. But the second part.

• 25:01David Hoffman?

  That was the base case. That was the known concern that we had.

• 25:04Ryan Sean Adams?

  Yes. So the second part, no custody requirement in defining a money transmitter.

• 25:10David Hoffman?

  So a smart contract can be a money transmitter?

• 25:13Ryan Sean Adams?

  A smart contract that does not, like, take a third-party custody, right? Yeah, smart contract. It doesn't require, you don't have to be a Coinbase or a BlockFi or Celsius or, you know, Kraken. That would be a custody requirement. You could just be a DeFi application and subject to money transmitter.

• 25:30David Hoffman?

  Honestly, Ethereum is code that custodies money.

• 25:32Ryan Sean Adams?

  Yes.

• 25:33David Hoffman?

  Ethereum is illegal.

• 25:33Ryan Sean Adams?

  See, that's the part that I think people are missing with this ruling. The judge is actually saying all non-custodial DeFi is subject to US money transmission laws. So that means Uniswap, potentially. That means AVE. That means NFT trading. To your point, does that mean Ethereum? We don't know yet.

• 25:53David Hoffman?

  You could expand this so far.

• 25:55Ryan Sean Adams?

  Oh, my God, yes.

• 25:56David Hoffman?

  So if I have gold sitting on my coffee table, non-custodial, like... The vibe around the gold, the universe is a money transmitter. Non-custodial is everything else that's not a custodian.

• 26:10Ryan Sean Adams?

  This would be, hopefully, an argument that an astute lawyer actually makes in court. You know, like, talking about physical objects versus crypto objects and kind of like, what's the difference? But that's why this is such a concerning ruling. And I was a little bit confused, like, why is a ruling coming down? I thought it was just a motion to dismiss. I thought the judge would just be saying, yeah, the court, the case will proceed for a moment, or like, no, it will be dismissed. But this is actual legal precedent. So a ruling like this does establish some legal precedent. It's almost like probabilistic finality, if that makes sense, right? It's like some proof of work. This is the way the common law system works. So, you know, one judge says something, makes a ruling, you know, the case isn't finalized.

• 26:54Ryan Sean Adams?

  The DeFi as money transmitters is not fully finalized and propagated across all of the US. It's not fully settled. But it does increase kind of the proof of work and the precedent. It does kind of harden the precedent here. So we have the opportunity for other rulings in the future, but it's kind of narrowed. Yes, this is one judge, but it calls into question if other courts will follow the exact same logic and define DeFi as being a money transmitter. And the actual violation is a violation of 18 U.S.C. Section 1960. Okay? This is a section that deals with money transmitters and the logic, and it pertains to the illegal operation of money transmitting businesses in the US.

• 27:36Ryan Sean Adams?

  And it's basically a federal crime to conduct, control, manage, or to own an unlicensed money transmitting business. Okay? And so what they're saying, what this judge is saying, is that tornado cash was, as an immutable contract, an unlicensed, unregistered money transmitting business, which, again, calls into question. Is the Uniswap code an unlicensed money transmitting business? Is the AVE code unlicensed money transmitter business? Who do they expect to ask for a license? Exactly. And the fact that Roman Storm is now in jail and facing jail time as a result

• 28:17Ryan Sean Adams?

  of a bad third party, terrorist, North Korea, whatever, using this code. I mean, the same could happen to Uniswap, right? Right. The same. Well, you can, it's not just smart contracts, it's code. So Ethereum, Ethereum needs to go get a money transmitter license. Right. And so what are the penalties, by the way, for this Section 1960 violation? Up to five years in federal prison. For whom? For the, potentially the developers. Roman Storm was the developer of Tornado Cash in this instance. He wasn't doing the money transmitting himself. He was, he developed the code and put it on a code on chain.

• 28:57Ryan Sean Adams?

  Up to five years in federal prison, forfeiture of the business, fines up to 250K. All right, so are you following why this is like potentially a big deal? And again, it's one judge ruling, but it's the proof of work precedent in our common law system that makes this incredibly concerning. Do you think the judge understands the implications that they are creating? So she actually didn't give this opinion in written form. Usually judges do. Usually judges give the opinion verbally and they also publish it in written form. She didn't in this case. She, this is Jake Chervinsky, she said she's not going to write an opinion. She read her decision from the bench and that's all we get. All right.

• 29:40Ryan Sean Adams?

  She didn't actually give a written opinion to defend this. She just read it from the bench. So the best we're going to get, and we do have now, is a transcript of what she said from the bench. But Jake says, I think it says a lot that she's not writing it up. So I expect she does know that this is contentious and has potentially disastrous implications here. And I think all of this causes a chilling effect, David. It's like, how do you feel as a founder in the US or in any country, launching an immutable DeFi contract? When potentially it's a money transmitter? And the penalty for this could be arrest and going to jail?

• 30:19David Hoffman?

  That's the worst that this can get. This is like a nuclear bomb for crypto.

• 30:25Ryan Sean Adams?

  It's kind of bad. It's kind of bad. Now, people will hear this and they'll say, look, it's one judge. You're being Chicken Little about this. You know, the DOJ might say something like, don't be crazy. Okay, this tornado cash, these guys were tied in with, you know, North Korea, DPRK stuff. It's like bad dudes. We're not going to bring criminal charges against Ave or Uniswap, of course. Like, but that's kind of like a trust me, bro, legal system. It doesn't that depend entirely on who's in control of the DOJ?

• 30:55David Hoffman?

  That's not how courts work.

• 30:57Ryan Sean Adams?

  Yeah, so I'm worried because this court case feels like nothing's protecting us from this. The trial of Roman Storm, where this will get determined to an even greater degree. That's still scheduled for December 2nd in New York. So it's expected to last two weeks. We're going to be paying attention to that because it has massive implications. Not just because of what you said earlier, whether a smart contract can be sanctioned or not, or can be deemed illegal, that's part of it. But also the future for all DeFi protocols in the United States.

• 31:32David Hoffman?

  Well, I mean, I'll hammer this point again. It's code that is being marked as the money transmitter, which means Ethereum, Bitcoin, like Layer Ones are therefore also money transmitters in this context.

• 31:46Ryan Sean Adams?

  Right. I don't know what we're going to do about this, but we'll be taking a look. I am going to be talking, I think you'll be out, David, you're flying somewhere. But I'll be talking to Jake Chervinsky this Friday about this issue and hopefully getting some more legal analysis. I'm not sure it's going to make me feel any better. But one thing that might make you feel better is actually donating to the Roman Storm court case. So he's still trying to raise funds. He needs more in order to pay the legal fees for this highly expensive court case. And if you want to go support that, we'll include a link in the show notes so you can donate to that cause.

• 32:21David Hoffman?

  All right, getting into subjects around Ripple, everyone's favorite blockchain. Ripple wants an ETF, but Gary wants probably to say no. So Bitwise has filed for the first spot XRP ETF. So now it's the ball is in the court for the SEC to approve or disapprove it.

• 32:36Ryan Sean Adams?

  What do you think they're gonna do, David?

• 32:38David Hoffman?

  I don't know. Major RC commented, "Bitwise positioning to file for the XRP ETF is highly noteworthy in the short term. This is likely a call option on the November election," he says.

• 32:48Ryan Sean Adams?

  Oh, yeah, I see that.

• 32:49David Hoffman?

  "Bitwise is a highly credible crypto native fund firm that does not just throw stuff out of the wall."

• 32:54Ryan Sean Adams?

  Yep.

• 32:55David Hoffman?

  Politics matter clearly here in the short term, but I think it is all inevitable over time.

• 32:57Ryan Sean Adams?

  Are they basically saying if Trump wins, then you probably have a shot at getting ETFs like the XRP ETF through, but if he loses, like, there's no chance?

• 33:06David Hoffman?

  Yeah, that's probably right. And I think there's probably actually some amount of demand. It will be really interesting to see the amount of demand for an XRP ETF. The XRP market cap has been a complete mystery to me as to why it's been so high for so long. There's some pool of demand somewhere. I don't know where, not in my friend circles, but somewhere out in the universe. So like, seeing that show up in an ETF will be interesting. But that's not the only Ripple-related news of this roll-up. The SEC wants to overturn a ruling by Judge Analisa Torres, who decided that XRP was not a security and its secondary sales did not constitute security sales. So this would imply that any token that's traded on like Uniswap, on any sort of DEX, or even on Kraken or Coinbase, just because it's being traded, does not make it a security.

• 33:51Ryan Sean Adams?

  Yeah, it was great news, right?

• 33:52David Hoffman?

  It was great news, yes.

• 33:53Ryan Sean Adams?

  When XRP, when Ripple, won this court case against the SEC, it was great news.

• 33:57David Hoffman?

  Yeah, it took a lot of wind out of the sails of Gary Gensler's "in theory of investing", which is basically everything is a security. But the SEC is coming back for a do-over, asking for a do-over.

• 34:08Ryan Sean Adams?

  Appeal, just to pull that case.

• 34:10David Hoffman?

  Yeah, exactly. And so this can also delay the approval of the Bitwise XRP ETF. And so, you know, the SEC not done yet. It's not even like, once upon a time, Jake Shavinsky gave me the take that like, maybe the SEC's position is that they're just going to take everything to court and they'll just let the courts decide by litigation, ruling by litigation, which maybe was a take. But the fact that they're like, losing and then going back to appeal-

• 34:36Ryan Sean Adams?

  Wasting our money, David, as taxpayers.

• 34:38David Hoffman?

  Is just like, another layer of evil coming out of the SEC.

• 34:41Ryan Sean Adams?

  Yeah. I don't understand why the Democrats, like, Democrats don't just like- Like, get this guy out. Cut him loose.

• 34:49David Hoffman?

  He is just completely rogue.

• 34:51Ryan Sean Adams?

  I don't understand.

• 34:51David Hoffman?

  The Democrats are just like, I haven't heard from Biden in months. Kamala is busy trying to get elected.

• 34:56Ryan Sean Adams?

  Where's his base of support? Who's like, yeah, Gary, you're doing a great. I guess we saw some of it in Congress when we saw that Brad Sherman's like cheering him on.

• 35:03David Hoffman?

  Yeah, yeah, all the, all the like Elizabeth Warren neo bankers.

• 35:06Ryan Sean Adams?

  I can't believe that's still a contingent. He is just doing such a terrible job for the US right now. And crypto, but not just crypto. Some good news, though, this week. His chief attack dog, so SEC enforcement chief Graywall decided to step down. It's not the Graywall from Coinbase. That's our guy.

• 35:24David Hoffman?

  Not related to Paul Graywall, yeah. So. Not our Graywall, their Graywall.

• 35:27Ryan Sean Adams?

  Yeah, and he was known for aggressive policing of the crypto industry, just kind of leading the charge. Under, under Mr. Graywall's leadership, the commission authorized more than 100 enforcement actions against the crypto industry. So he is stepping down and there is some chatter about this. Jake, again, Jake's getting a lot of quotes in this episode. Jake Trivinsky saying, this is not normal. Not normal for an SEC enforcement director to get disappeared like this. Gone on nine days' notice with no replacement lined up. Perhaps the inevitable end to a campaign of unlawful harassment and misrepresentation resulting in many embarrassing defeats in court. So this could be a precursor to Gary Gensler also, you know, being given his exit slip. Maybe.

• 36:11David Hoffman?

  His goodbye.

• 36:11Ryan Sean Adams?

  Maybe this, you know, Mr. Graywall goes first.

• 36:14David Hoffman?

  Yeah, don't let the door hit you on the way out. All right, coming up next, Vitalik has a solution for making Ethereum alignment great again, and also has a take as to what the Ethereum roadmap should look like in the near term. We're going to go through all of that and more. And also Visa launching a tokenization platform on Ethereum for fiat, AKA stablecoins, with banks as the customer. That's kind of interesting.

• 36:34Ryan Sean Adams?

  Bank the banks.

• 36:35David Hoffman?

  Bank the banks. All of this and more, but first I want to talk about some of these fantastic sponsors that make this show possible. Launching a token? Don't let complex legal and tax issues slow you down. Toku provides specialized support to optimize your launch and ensure that you as a founder and your team and your investors get the most tax-efficient outcomes. The Toku team understands the crypto space inside and out and will ensure your token launch is fully. While maximizing tax efficiency, Toku can connect you with the best attorneys if you need them to make sure that you have the best advice and Toku can help optimize your taxes so you pay the least possible amount of taxes while still maintaining legal compliance. With Toku's guidance, you can concentrate on building your company while Toku handles the logistics. Token launches don't have to be complicated. Talk to Toku today to get a free initial token valuation.

• 37:18David Hoffman?

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• 38:03David Hoffman?

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• 38:12David Hoffman?

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• 38:57David Hoffman?

  Pretty cool scoop by Blockworks. Visa launches fiat-backed tokenization platform on Ethereum. They are developing a new product to help banks issue fiat-backed tokens on the Ethereum network. The Visa Tokenized Asset Platform, VTAP, will enable the development of fiat-backed tokens powered by smart contracts to help digitize and automate existing processes that will then power the exchange of real-world assets. Yeah, a bank would use Visa's new platform to purchase tokenized real-world assets such as commodities or bonds with near-real time settlement using a token. The statement said, "The first financial institution to use VTAP will be a Spanish bank BBVA, who expects a rollout of a live pilot in 2025." Pretty cool. Visa on the Ethereum Layer 1.

• 39:42Ryan Sean Adams?

  It's all based on Ethereum. So, you know when you deposit funds into kind of your Wells Fargo account? How it's not like a dollar, it becomes like a Wells Fargo dollar, that sort of thing?

• 39:53David Hoffman?

  Oh, sure, yeah.

• 39:53Ryan Sean Adams?

  Do you think there's a world where every single bank has their own version of like a tokenized dollar on-chain?

• 39:59David Hoffman?

  Deposits, yeah.

• 40:00Ryan Sean Adams?

  Deposit on-chain? Like, there'll be like a Wells Fargo stablecoin kind of thing, and there'll be a, you know, a Bank of America stablecoin thing? I mean, all of these will be fungible.

• 40:09David Hoffman?

  Bats and Robbins, 31 different flavors of stablecoins.

• 40:11Ryan Sean Adams?

  Yeah, maybe. Maybe something like that could happen.

• 40:13David Hoffman?

  That would be so bullish for Curve.

• 40:14Ryan Sean Adams?

  For Curve?

• 40:15David Hoffman?

  Yeah, yeah, yeah.

• 40:17Ryan Sean Adams?

  I haven't heard of Curve in a while. That's interesting.

• 40:19David Hoffman?

  Yeah, because it has completely just flipped into just like the background, backend of like stablecoin exchange volumes.

• 40:25Ryan Sean Adams?

  Yeah, just hopefully it's not illegal, David.

• 40:27David Hoffman?

  Thank you for that reminder.

• 40:29Ryan Sean Adams?

  David, you read this blog post Vitalik shared earlier this week, his thoughts on how to make Ethereum alignment legible. So, he's getting into kind of like, what are the values that really define Ethereum? And he mentioned a few things. Open source, so allowing for the inspection of code to ensure security and reduce risks of lock-in. So, open source is a big Ethereum value, according to him. Open standards, you know, things like ERC 20s, ERC 1271s, account abstraction, that kind of thing. Decentralization and security. And he defines this a little bit, like, the walkaway test, which is, does the app remain usable if the team and all the servers disappear? Like, if everybody walked away, is it still usable?

• 41:14Ryan Sean Adams?

  I mean, that's one definition of decentralization. And what's the potential damage if the team attempts to compromise the system? So, and then, and then lastly, he talked about positive-sum network effects for Ethereum being kind of a core value. So, things like using Ether as a token to enhance The Ethereum network effect. So this was kind of like, these are soft and I would say more squishy values oriented dimensions of what constitutes Ethereum alignment. But then he also created like a call to action to start measuring some of this. And he gives some great examples of ways we're already measuring it, which is kind of cool. Like MEV watch is a fantastic dashboard tool that measures basically the censorship resistance of Ethereum, you know?

• 41:59Ryan Sean Adams?

  What blocks are OFAC sanctioned and what aren't? So that's good, good kind of transparency check and balance. We also have dashboards for client diversity, which shows kind of the, you know, the portfolio of diversity of all of the ETH clients. We have dashboards like L2B, which are just phenomenal and kind of tracking the, the centralization or decentralization levels of, of layer twos. And these are the, the dashboard metrics. He's kind of calling the Ethereum community to, to kind of develop. So we can have our own internal regulatory system. I gotta say, I think this is, it's an unspoken value proposition of Ethereum. It's actually like a core strength Ethereum has is these dashboards as kind of regulators as a check on the system to maintain the decentralization. They're certainly doing a far better job than any of the nation state regulators.

• 42:45David Hoffman?

  Actual regulators, yeah.

• 42:45Ryan Sean Adams?

  Yeah, and I see this pretty uniquely in the Ethereum community. I mean, there's some in Bitcoin, there's some in other communities for sure, but Ethereum's really doing a stellar job at this.

• 42:54David Hoffman?

  I think regulation via dashboard is kind of based, actually.

• 42:58Ryan Sean Adams?

  Yeah.

• 42:59David Hoffman?

  It's kind of cool.

• 42:59Ryan Sean Adams?

  It's awesome.

• 42:59David Hoffman?

  Yeah, cause like the dashboards actually don't enforce anything. It actually just helps the social layer become more informed and take more action about things. That's the only Vitalik take of the week on a core dev call. Vitalik made a pretty strong appeal for increasing blob counts for the Pectra upgrade. Pectra has been split into a very big hard fork has been split into two hard forks with Pirdas, which is the, kind of the qualitative upgrade of Ethereum blob space, just allowing blobs to just pack more punch. That has actually been pushed out into the second half of the Pectra upgrade. So TBD on that, it's being pushed out into the future. As a result of that, Vitalik makes an appearance on the core dev call saying, since we are

• 43:40David Hoffman?

  doing that, we should increase the quantitative amount of blobs today. I thought there was actually a pretty useful clip from the core dev call, so we'll go ahead and play that right now.

• 43:49Speaker 02

  Oh, I think, I mean, the reason why we need to think about this is because like if you just look realistically, to me, it's just clear that a yeah, like just scaling actual use uh usage is just incredibly yeah important and I mean, if Ethereum does not offer this, then like people will find it elsewhere and people are going to have like insecure blockchain experiences that are just not on Ethereum, right? And the uh and I would even argue that like even a 33% blob increase is probably more valuable than like even three of the

• 44:30Speaker 02

  vector EIPs at this point. So if you just like look at the ratio of effort to value, just like the amount of actual value here is uh quite high in terms of increasing the increasing the amount of activity that can happen.

• 44:48Ryan Sean Adams?

  That was interesting. Like, he almost never appears at these core dev calls and weighs in, right? And so this is not unprecedented, but I haven't seen this in a while. And he's sort of making the case, David, that like if we don't do this, then users will turn to other communities that are less secure and less decentralized. So is this war mode Vitalik?

• 45:09David Hoffman?

  This is the first time I've seen Vitalik actually been like, hey, let me like draw out some of the actual points that he's making. He wants to increase the blob target from three to four and the max blobs from six to eight. And he cites the fact that currently blob space, blobs are 75% full. And making the case that if we reach 100% full, then as a result of just being at capacity, blobs are going to get expensive. And layer twos are going to choose to use different DA providers that aren't Ethereum, citing unstable blockchain experiences. And think like therefore implying that Ethereum has a higher quality block space, which I think is pretty hard to argue that it doesn't.

• 45:50David Hoffman?

  But also he's like, it's like a market competition perspective of like, if we don't do this, we're going to lose market share of rollups who use our DA. And we want to, we want to ensure that we have the best pricing of the best quality of it's like, it's kind of war mode Vitalik.

• 46:04Ryan Sean Adams?

  Yeah, it's still, it's still penetration pricing, right? For to get all, collect all of the L2s and lock them in.

• 46:10David Hoffman?

  So some summary of the takes around the ecosystem. Dankrat as well, and other base devs are in huge favor of this. Jesse said that Base is actually interested in consuming even more blob space. So he would approve any sort of just increasing of the blob space availability on the Ethereum Layer 1. There's some pushback as well, but generally, I think people are leaning into supportive of this.

• 46:34Ryan Sean Adams?

  What are the trade-offs here? It's just going to increase slightly to some degree. The node requirements for validators and stakers.

• 46:44David Hoffman?

  Not node requirements, because that implies hardware. It's just bandwidth costs. And the bandwidth is like the big bottleneck for all Ethereum scaling in this present moment.

• 46:50Ryan Sean Adams?

  Yeah, I don't, I've never seen those measurements, actually. Like, how much bandwidth does it take to actually run a validator pre this and post this? You know, it's like, obviously, you have to have high-speed internet. But do you need like, you don't need gigabit internet at this point.

• 47:03David Hoffman?

  Well, I think the argument being made by many solo stakers is that solo stakers live in places where like, internet's not amazing. And we want to be able to run Ethereum in like, you know, middle America.

• 47:15Ryan Sean Adams?

  Like your 5G networks should be able to run in Ethereum.

• 47:17David Hoffman?

  There's just a lot of places in the world that have like, okay, internet. And we want to make sure that Ethereum can run in places with okay internet.

• 47:25Ryan Sean Adams?

  Yeah, I get it. It's an interesting debate that's going on, but Vitalik kind of leaning into the let's get competitive and let's go win this.

• 47:32David Hoffman?

  Speaking of Jesse Pollock, he has been elevated. He's been promoted to the Coinbase exec team. So congratulations. He is now actually working on the Coinbase wallet project as well as Base. In addition to joining the Coinbase exec team. The Coinbase exec team, I don't know if it's, these are the only eight people, but there are eight headshots here from this Coinbase website saying our executive team, starting with Brian Armstrong, of course, Emily Choi. And all of these are like very professional, like warmly tinted, pretty uniform headshots. And then when it gets to Jesse, it's his goddamn crypto.

• 48:05Ryan Sean Adams?

  I love that like trad investors on Wall Street are gonna see this, you know, and all the annual filings.

• 48:11David Hoffman?

  They let him keep his CryptoPunk as his headshot. That's just great.

• 48:14Ryan Sean Adams?

  This is kind of cool. You know, Polymarket has an app too. So they recently released, I believe, an iOS app, might also be available on Android that allows you to just like, look at all of the different election forecasts that Polymarket is putting together. Because TradFi Media is recognizing Polymarket as a fantastic source of this type of information, prediction information. Of course, it's read-only because actually participating in these markets like is illegal in the US, right? But it's number two on the download charts right now. And that's above...

• 48:50David Hoffman?

  Download charts of news.

• 48:51Ryan Sean Adams?

  Download charts of news. And that's above the New York Times and CNN right now.

• 48:55David Hoffman?

  Yeah, suck it.

• 48:55Ryan Sean Adams?

  That's kind of cool. Shane Copeland, the founder of Polymarket, calls this "the flippin'ing", the news edition, so.

• 49:02David Hoffman?

  CZ tweeted out GM this last week. That's the news. Why did he tweet out GM? Because he got released from prison. So congrats to CZ for getting out and tweeting out a GM that got almost 200,000 likes, 16 million views.

• 49:17Ryan Sean Adams?

  I mean, I always wondered if he'd come out as a hero, if that's what like, you know, how crypto would sort of view him. And certainly that seems to be the case.

• 49:24David Hoffman?

  Yeah, definitely. Talk to me about North Korea, Ryan.

• 49:28Ryan Sean Adams?

  Talk to you about North Korea, yeah.

• 49:30David Hoffman?

  Yeah.

• 49:31Ryan Sean Adams?

  Well, okay, so the relevant news about North Korea was this article from Sam Kessler from Coinbase. And the title of it is "How North Korea Infiltrated the Crypto Industry", and the subcaption is this: "More than a dozen blockchain firms inadvertently hired undercover IT workers from rogue states, mostly from North Korea." So David, over the last four years or so, this is starting to come out, it seems like the crypto industry, 12 companies that have just reported this, I'm sure it's far more that have gone unreported. You know, organizations like Sushi, like You're in Finance, like Cosmos, like Phantom, like Injective, okay? These are some sort of crypto DeFi-related projects.

• 50:13Ryan Sean Adams?

  They all inadvertently hired North Korean agents, like accidentally. So they post it. It works like this. You post a job post, right? Software developer, something. And what's kind of the open source way? You hire based on merit, right? Like, show me your GitHub, show me your like code. I don't care where you live. I don't care, you know, who you are. Can you ship?

• 50:32David Hoffman?

  Don't care your race, don't care your gender.

• 50:34Ryan Sean Adams?

  Yeah, big question is, can you ship? And so these North Koreans are showing up with fake identities. Let me show you an example. This is a fake identity from Texas, okay? This is like a driver's license from Texas. And they are-

• 50:46David Hoffman?

  That would pass my-

• 50:48Ryan Sean Adams?

  They're even doing this with professional background testing. So this is a North Korean agent which has a passport, okay? And they're getting into these companies and starting to ship code. And guess what, why they're there, David? It's not to actually productively work. These are agents, North Korean agents, working for the government. And they are looking for ways to siphon funds, put some malicious code in a protocol, find an opportunity to steal money in order to ship it back to North Korea and support North Korea's weapons programs and other things, okay? So, do you know-

• 51:22David Hoffman?

  Dude, Korea is doing almost anything that they can think of.

• 51:25Ryan Sean Adams?

  Do you know Zaki Manion?

• 51:28David Hoffman?

  Zaki Manion, yeah.

• 51:29Ryan Sean Adams?

  Manion from Cosmos, okay? It's like, we've known him for a long time. So apparently, Zaki inadvertently hired- He got a message from the FBI saying, "There's some weird crypto transactions coming into your accounts. What's going on?" He looked into it, and it turned out he had hired two North Korean employees at his like Cosmos staking infrastructure company inadvertently. And his comment was this, "I talked to them for every day, for every day for almost a year. They did the work, and I was, frankly, pretty pleased." Like, they were good employees for an entire year before they decide-

• 52:02David Hoffman?

  Imagine if it's your job to go get a job and be a good employee as somebody else's. Like, that's your job.

• 52:09Ryan Sean Adams?

  Talk about playing the long game, man. Like, the long con here. And this was kind of eye-opening for me because, you know, go further in the articles, if someone made the statement that it's looking like almost 50% of job applications for crypto jobs at this point in time-

• 52:24David Hoffman?

  Crypto developers, yeah.

• 52:25Ryan Sean Adams?

  Crypto dev jobs might actually be North Korean agents. Right? So what does this do to the trust fabric of everybody who's hiring in crypto?

• 52:33David Hoffman?

  There are North Korean listeners of this podcast right now.

• 52:38Ryan Sean Adams?

  That is terrifying.

• 52:40David Hoffman?

  People are listening to this. There are people listening to this who are North Korean infiltrators of crypto companies' jobs and they're like, "Fuck, they might be on to me."

• 52:49Ryan Sean Adams?

  Well, like, yeah, maybe, maybe in their interviews, they're, they're, you know, dropping Bankless episodes that they've listened to or something like this, right? It could be relevant. This is absolutely wild.

• 52:58David Hoffman?

  Oh my god.

• 52:58Ryan Sean Adams?

  And I think what, obviously, if you're, if you're hiring in crypto, be on the lookout for this. Be extra careful. You gotta implement some background checks.

• 53:05David Hoffman?

  They showed him a Texas license.

• 53:07Ryan Sean Adams?

  Yeah, and I, I think this is, this might be just scratching the surface. Like, my nightmare scenario is one, like, a North Korean agent gets into kind of some core dev client code. Can you imagine that? Inject something? Like, if you're the Ethereum Foundation, you're reading this, "I hope you guys are doing some robust screening."

• 53:27David Hoffman?

  Right.

• 53:28Ryan Sean Adams?

  Every single group that's working on a client, because we have been a bit trusting in this industry. Again, the open source rule, you can ship code, you have merit. Well, some of these North Korean agents can do that.

• 53:41Ryan Sean Adams?

  They're good employees, maybe, at first it seems. And also, another thing is, do you know, it's highly illegal to actually hire any North Korean workers.

• 53:51David Hoffman?

  Inside of the Bankless Discord, inside of Bankless Ventures, Ryan Sean Adams here dropped a comment where he goes, "Hey FYI, we need to make sure our portfolio companies aren't hiring anyone from North Korea. Hiring someone from North Korea is illegal."

• 54:03Ryan Sean Adams?

  Yeah.

• 54:04David Hoffman?

  And I'm like, huh!

• 54:05Ryan Sean Adams?

  You know what I'm saying? Well, but like, it's illegal and it's one of those things where if they decided to enforce it, I mean, it's like possible, like jail time and like, like all sorts of bad things, David. All sorts of fines and stuff like this. They haven't enforced that on these crypto companies.

• 54:18David Hoffman?

  Seventeen thousand ways to go to jail in this industry.

• 54:22Ryan Sean Adams?

  Oh, I love this industry. Anyway, we're leveling up. Like, no one else is front-running all of the, the chaos of the 21st century like crypto. We're doing that for, for everyone else.

• 54:33David Hoffman?

  Yeah, that's what I was here to do.

• 54:35Ryan Sean Adams?

  David, you are getting ready for your fight, okay? We're on the eve.

• 54:39David Hoffman?

  Yep.

• 54:40Ryan Sean Adams?

  We are what, like, seven days out? Eight days. Eight days out, the time of recording. So, we promised him alpha. You give some alpha. This is you. Is this a real-life picture of you?

• 54:51David Hoffman?

  Yep.

• 54:51Ryan Sean Adams?

  And your fight coach.

• 54:52David Hoffman?

  Yeah, so Josh, our podcast editor, just came over to like this one-on-one time I had with my coach. Cause he, you know, everyone was very hyped about Nick Carter's video when he did his video. So I was like, you know what? I want one.

• 55:02Ryan Sean Adams?

  Yeah. So you got a hype video coming up?

• 55:05David Hoffman?

  Yeah, I got a hype video coming up.

• 55:06Ryan Sean Adams?

  So stay tuned for that. And I saw this hype video. I think this is Kane Warwick's hype video.

• 55:10David Hoffman?

  I was not very hyped by this. I don't know about you. This didn't do too much to me.

• 55:15Ryan Sean Adams?

  Oh, yeah, I don't know what it does to me, but I guess it's impressive. He's getting that sound that you're hearing, podcast listeners, is Kane getting slapped in the stomach by his trainer. Like gloves slapped in the stomach.

• 55:25David Hoffman?

  Eh, it's not that hard.

• 55:26Ryan Sean Adams?

  That doesn't intimidate you?

• 55:27David Hoffman?

  He did, he did 10 sit-ups. My, my coach does that to me. I don't film it.

• 55:30Ryan Sean Adams?

  Here's what was so weird to me is like, you guys just recorded a podcast like the week before your fight. So you came over to your house?

• 55:36David Hoffman?

  It'll come out next week.

• 55:37Ryan Sean Adams?

  An in-person podcast, alright, so?

• 55:40David Hoffman?

  We actually just settled the fight with a thumb war, actually. So like, we're good.

• 55:46Ryan Sean Adams?

  No, but like, what'd you think? I mean, he's sitting probably on the couch behind you. He's probably sitting, he's sitting across from you. You're staring into the face of, you know, somebody that's, you're either gonna beat down or he's gonna beat you down. And like, what'd you think? Were you intimidated or do you feel like, I got this?

• 56:01David Hoffman?

  I think it'll be a pretty good fight. I think it'll be a pretty good fight.

• 56:03Ryan Sean Adams?

  Alright, well, I mean, that's the alpha. Honestly, I just wanted to hear what you said about this. The poly market right now could be an opportunity, bankless listeners, because poly market is giving you a 70...

• 56:12David Hoffman?

  That is deep value. Hoffman is deep value on the poly market.

• 56:16Ryan Sean Adams?

  Deep value, according to David Hoffman.

• 56:17David Hoffman?

  Deep value.

• 56:18Ryan Sean Adams?

  32% odds. So this could be the buy of a lifetime.

• 56:22David Hoffman?

  Yeah, well, it's 32% odds is the middle of the market. If you buy me, you're buying at 39%.

• 56:27Ryan Sean Adams?

  Wait, how's that work?

• 56:28David Hoffman?

  Because the market is kind of illiquid. So there's a spread.

• 56:32Ryan Sean Adams?

  Yeah, there's 10K on this right now. I mean, you could boost those numbers up. I think there could be a fantastic opportunity.

• 56:38David Hoffman?

  It wouldn't take too much to move this market pretty far.

• 56:40Ryan Sean Adams?

  Well, this is, I guess, final notice because permissionless is next week.

• 56:44David Hoffman?

  This is the last warning to come to permissionless.

• 56:47Ryan Sean Adams?

  I'm excited about it. I can't wait to see everyone in person. It's going to be like, content is going to be incredible. Who are some of the speakers? Like, I'm talking to Chris Dixon the first day. I'm super excited about that. I had the pre-call last week. We've got a lot of things to say. He's got a lot of things to say. It's gonna be interesting.

• 57:03David Hoffman?

  Me and Jill Gunter from Espresso are going up against Kyle Samani and Max Resnick.

• 57:09Ryan Sean Adams?

  Oh, wow.

• 57:10David Hoffman?

  About whether or not Ethereum Layer 2s are Ethereum. I think that's gonna be pretty hot.

• 57:15Ryan Sean Adams?

  Wow.

• 57:15David Hoffman?

  And the great thing is, is that is just like four hours before my fight with Kane. So I'm just gonna be fucking jacked. I'm gonna be ready to go.

• 57:23Ryan Sean Adams?

  Just adrenaline pumping?

• 57:25David Hoffman?

  Yeah. I'm like, all right, who wants to fight?

• 57:28Ryan Sean Adams?

  No, it's gonna be a great event. And a reminder, there's still, if you're a last-minute person, you're like, I don't know if I can. It's in Salt Lake City. It starts on, what, Wednesday?

• 57:37David Hoffman?

  Wednesday, Wednesday the 9th.

• 57:38Ryan Sean Adams?

  Wednesday the 9th.

• 57:38David Hoffman?

  Friday the 11th. And bankless party on Wednesday at 5:00 PM at a brewery. Free drinks. I will not be drinking. Ryan might be drinking. So if you are a bankless citizen going to permissionless, make sure you come to our party.

• 57:50Ryan Sean Adams?

  And bankless listeners, you get a 10% discount off these tickets. So bankless 10 for your last-minute ticket. If you are a bankless citizen, there's a 30% link in the show notes for you where you can get a major discount. Guys, you know crypto is risky. You could lose what you put in. But we are headed west. Next week, we're headed to Salt Lake. This is not for everybody.

• 58:09David Hoffman?

  We're literally going west.

• 58:10Ryan Sean Adams?

  Yeah, we are going to the frontier. But we're glad you're with us on the bankless journey. Thanks a lot.